Chevron Corp. said Monday its Australian subsidiary will proceed with the massive Wheatstone Project in Western Australia to boost the commercialization of gas resources in the region. The first phase includes construction of two liquefied natural gas (LNG) processing trains and attendant infrastructure costing $29 billion.
“The Wheatstone Project is a legacy, value-creating investment that will provide Chevron with significant reserves and production growth,” said Chevron CEO John Watson. “This project, along with Gorgon LNG [see Daily GPI, May 27, 2010], is well positioned to provide a large, secure energy supply to meet growing demand in the Asia-Pacific region, and to place Chevron as one of the world’s leading LNG suppliers.”
The Gorgon and Wheatstone LNG projects are among the biggest investments in Chevron’s world-wide, gas-focused master strategy.
The foundation phase of Wheatstone is estimated to cost US$29 billion and consists of two LNG processing trains with a combined capacity of 8.9 million metric tons per year, a domestic gas plant and associated offshore infrastructure including the processing platform, subsea equipment, drilling and an export trunkline. First gas is planned for 2016.
Wheatstone was granted final federal government approval for a 25 million-metric ton per year LNG development, paving the way for future expansion, Chevron noted.
The Wheatstone onshore foundation project, located at Ashburton North, 7.5 miles west of Onslow on the Pilbara Coast, is a joint venture of Australian subsidiaries of Chevron (operator 73.6%), Apache Corp. (13%), Kuwait Foreign Petroleum Exploration Co. (KUFPEC, 7%) and Royal Dutch Shell plc (6.4%) (see Daily GPI, April 12).
The foundation project will be fed with natural gas from the Wheatstone and Iago fields, which are operated by an Australian subsidiary of Chevron in a joint venture with Shell and represents 80% of the plant’s foundation capacity, Chevron said.
The Wheatstone hub concept was developed to provide foundation infrastructure for the commercialization of Chevron’s gas resources as well as a destination for third-party gas. Under the hub concept, Apache and KUFPEC will provide the remaining 20% of gas from their Julimar and Brunello fields. Development of the two third-party fields is not included in the estimated project cost.
About 60% of Chevron’s equity LNG offtake is presently covered under binding long-term agreements. Discussions are continuing with potential customers to increase long-term offtake to more than 80% and to sell down equity, Chevron said.
Once approvals have been obtained, Japan’s Kyushu Electric is expected to join the project, taking 1.83% equity interest in the upstream and 1.46% in the downstream. Chevron’s net estimated investment, after the Kyushu Electric and follow-on sell-downs, is in the range of US$16–22 billion.
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