Chevron Brings Forward Plans for West Australian Gas

By Angela Macdonald-Smith

Aug. 12 (Bloomberg) -- Chevron Corp. said its Gorgon liquefied natural gas venture in Western Australia will bring forward plans to build a plant to supply fuel to the local market and help prevent energy shortages in the state.

The Gorgon partners will assess whether to construct the local plant at the same time as they consider sanctioning the LNG export project, a decision expected next year, Colin Beckett, San Ramon, California-based Chevron's manager for the Greater Gorgon area, said today. The partners include Royal Dutch Shell Plc and Exxon Mobil Corp.

Western Australia, which generates a third of the nation's exports, has experienced an energy shortage since a June 3 explosion at an Apache Corp. plant that supplies about 30 percent of the state's natural gas. The disruption has boosted gas prices and left mining companies and businesses scrambling to secure alternative fuels to prevent shutting down operations.

``Certainly the domestic gas market in Western Australia is more buoyant from a supply point of view than it has been,'' Beckett said today in a telephone interview. ``This does start to provide some certainty for the market that there will be another supply, another infrastructure link to the coast.''

The gas plant would have a capacity of 300 terajoules a day, compared with the existing Western Australian market of about 1,150 terajoules a day, Beckett said. He declined to estimate the cost of the plant, which would be built on the Barrow Island nature reserve, within the site of the LNG project.

Contract Tenders

The Gorgon partners approved funding for all the work on the project that will take place before the final decision to proceed, Beckett said. That will allow the venture to invite bids for A$300 million ($263 million) of contracts, to be followed over the next five months by tenders for contracts for ``several billions of dollars'' that will be awarded once the project gets final approval, he said.

The LNG venture will comprise three production units of 5 million metric tons a year each. The local gas plant will start up at the same time as the third LNG production unit, which will be about 12 months after the first two start, Beckett said.

The project will boost the net present value of Australia's Gross Domestic Product by A$64.3 billion and provide government revenues of about A$39.8 billion, Beckett said today in an e- mailed address, citing a study by economic consulting firm ACIL Tasman Pty.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net