Shell takes final investment decision on Gorgon LNG project, Australia

The Board of Royal Dutch Shell plc (Shell) has taken the Final Investment Decision on the Gorgon liquefied natural gas (LNG) project, signalling the start of initial construction on one of the world’s largest natural gas developments. Chevron will operate the project, with a 50% stake, with participants Shell and ExxonMobil each holding 25% shares.

“This is a great milestone for Shell and Australia,” said Malcolm Brinded, Shell’s Executive Director, Upstream International. “The project will nearly double Australia’s liquefied natural gas output and we expect it to be in production for decades to come.”

The project will include construction of a liquefied natural gas facility with an annual capacity of around 15 million tonnes per year on Barrow Island, off Western Australia’s coast. The project plan incorporates stringent environmental standards designed to protect the island’s natural heritage.

Plans call for development of the Greater Gorgon gas fields, beginning with the Gorgon and Jansz-Io gas fields – the largest gas discoveries to date in Australia – with development facilities installed directly on the ocean floor, in water up to 1,300 metres deep. Two subsea pipelines with a combined length of 240 kilometres will carry the gas to facilities on Barrow Island.

Gorgon is also expected to be a world leader in capturing the naturally occurring carbon dioxide produced alongside natural gas and storing it safely underground, more than two kilometres beneath Barrow Island.

Jon Chadwick, Shell’s Executive Vice President, Australia – Upstream, said: “The Gorgon project will provide important supplies of energy to the fast-growing economies of the Asia-Pacific region and will have a domestic gas supply component which we anticipate will be jointly marketed to gas customers in Western Australia.”

In November 2008, Shell announced a long-term supply agreement with PetroChina for LNG from its share of Gorgon. During the 20-year contract term Shell will sell up to two million tonnes of LNG per year to PetroChina. Shell’s access to LNG import terminals around the world provides further options for Gorgon gas.

Shell is a global, integrated energy company with operations in more than 100 countries and territories, with businesses including: oil and gas exploration; production and marketing of liquefied natural gas and gas to liquids; marketing and shipping of oil products and chemicals; and renewable energy projects including biofuels.

Shell has been operating in Australia since 1901 and employs 3,000 people. It has a one-sixth interest in the North West Shelf Venture, a 100% interest in the Prelude development offshore north west Australia, as well as equity interest in other developments including the Browse Joint Venture and Sunrise Joint Venture. It is also active in the coal seam gas industry, with its Shell Australia LNG Project in Gladstone, Queensland.

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