Garrett gives $50b Gorgon gas project go-ahead

By Online parliamentary correspondent Emma Rodgers

Federal Environment Minister Peter Garrett has given the nod, with conditions, to the construction of the $50 billion Gorgon gas project on Barrow Island off the West Australian coast.

His formal approval of the project was expected after last week’s announcement of a record deal to sell liquefied natural gas (LNG) from the yet-to-be developed gas field to China over the next 20 years.

The Federal Government had been criticised for announcing the $50 billion China deal before Mr Garrett had officially signed off on the project.

But Mr Garrett denies the announcement pressured him into signing off on the deal.

He says an extra 28 conditions have been imposed on the project to ensure that Barrow Island, which is a Class A nature reserve, is adequately protected.

“I take my job as a regulator very seriously,” he said.

“I want to get the best results for the environment I can, consistent with the regulatory regime that I’m required to observe.“I’ve made sure that the matters of environmental significance that I’m required to consider under the national environmental legislation have both been identified and conditions applied to ensure that there are no adverse impacts.”

The Gorgon project is a joint venture of Chevron, ExxonMobil and Shell, and will cost about $50 billion to construct. It is expected to generate about $300 billion worth of gas contracts and 6,000 jobs during construction.

The project will also pump $40 billion worth of revenue into the Federal Government’s coffers.

Concerns had been raised over the project’s impact on several species on Barrow Island, including the flatback turtle.

Mr Garrett says as well as the extra conditions, 20 management plans are also in place.

Several of the conditions imposed on the project are to deal with the potential impact to the flatback turtle.

A monitoring program must be set up and the Minister can order action be taken if the monitoring shows the project is having a detrimental effect on the turtles.

Other plans must also be put in place to manage and monitor other species such as the spectacled hare-wallaby and golden bandicoot.

Western Australian Premier Colin Barnett says the conditions are stringent.

“I don’t believe any project in WA, perhaps in Australia, has the degree of scrutiny and the exacting conditions placed on it that the Gorgon project does,” he said.

The Federal Opposition supports the project’s approval.

But Dr Andrew Burbidge, who is a consultant for Chevron, says the project should not go ahead because it will threaten the island’s biodiversity.

“There’s no such thing as a perfect quarantine system,” he told Radio National earlier today.

“The oil field that the company now manages on the island has caused the introduction of a number of animals already.”

Greens Senator Rachel Siewert has also condemned the project’s approval.

“Just today we’ve heard that Chevron’s own environmental consultant gave them advice to locate the processing plant on shore, as the environmental impact to Barrow Island is too great,” she said.

“This proposal will have unacceptable environmental impacts on the terrestrial and the marine environment.”

8 thoughts on “Garrett gives $50b Gorgon gas project go-ahead

  1. A visitor to this blog by the name of ‘Anon’ lead me to this post. He She states “Who is going to buy our LNG products now? And surely if the buyers are there, the value will be reduced …Ting ting”

    Interesting and good question.

    Besides our PNG LNG, Exxon is also a partner to the Gorgon gas project (only 25% of it) so I imagine that some strategy must be in place for LNG sales from 2 Exxon sources from this region.

    Both PNG LNG and the Gorgon gas project are both to make their final investment decisions this year. The Gorgon gas project will take 5 years to get to production after the final investment decision and PNG LNG is expected to start production in late 2013, early 2014. So I’d say we better tie up some contracts quick smart, or will we sell to Australia to sell to China?

    NB: You can read more information on PNG LNG here and on the Gorgon gas project here

    1. Interesting discussions here. I think there are some confusion with securing customers for our PNGLNG project.

      The total annual production capacity of our project is 6.3 million tonnes with additional reserves capable of supporting a further 3.15 million tonnes pa.

      Of the 6.3 million tonnes that have been committed to this project, 2 million tonnes will go to a Chinese buyer while the remainder will go to two Japanese buyers and a Taiwanese buyer.We are 100% sold. So Gorgon is not a threat to PNGLNG.

      Gorgon, and indeed PNGLNG too, are somewhat of a threat, though, to the second LNG project (Liquid Niugini Gas) headed by InterOil and Petromin. Because this project is still in its infancy with no customers signed up as yet.

      PNGLNG has now proceeded to early works on the strenght of its customer contracts as pointed out above. The only stumbling block I see is the bickering among our LOs about who owns what piece of land and this is creating some uncertainty for all the stakeholders involved – project operators, customers, gov, other businesses, general pubic etc etc.

      Gorgon doesn’t have such LO issues and therefore has an edge over us in this respect. But customers? NO PROBLEM.

      1. Thanks for clearing that up David.

        So just for the record in our region:
        – PNG LNG will be producing 3.15 million tonnes pa.
        – Gorgon will be producing 15 million tonnes pa.

    2. Emmanuel,

      No, PNGLNG will be producing 6.3 million tonnes pa. 3.15 million tonnes pa is spare capacity. Remember that not all of the gas in the fields up in the highlands are committed to PNGLNG project.

      Gorgon will be producing whatever that is, but the dollars do point in the direction of a much larger project than ours. But that is not a concern to us as long as we have our customers all signed up and ready to go.

      And most importantly to keep our end of the bargain once production begins and continue to deliver on time. This is what gets me nervous about us when LOs shut down the production process (as we’ve heard in recent days) which negatively impacts the whole supply chain. I guess this is the element of uncertainty all stakeholders wan’t addressed.

      1. Thanks, okay correction again:

        – PNG LNG will be producing 6.3 million tonnes pa.
        – Gorgon will be producing 15 million tonnes pa.

        So I guess it boils down to who can give the best customer service at the end of the day.

  2. A thousand apologies ‘Anon’, jeeze now I feel like some sexist idiot 😦 (which I’m seriously not), I should have been more neutral with my statement, sorry again.

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