The Gorgon Roars

The Gorgon Roars

Forwarders and heavy-lift carriers are jockeying for position as Australia moves ahead with development of its enormous offshore natural gas resources, endeavors that will require massive amounts of project and breakbulk cargo over the next five to 10 years. All told, about $127 billion in Australian LNG projects are expected to begin exporting between 2012 and 2018, according to Australian news reports.

None of these projects can be called modest, but the Gorgon field, off Australia’s northwest coast, dwarfs them all. Estimated to contain some 40 trillion cubic feet, it is thought to be the largest natural gas field in the world. Gorgon is expected to produce 15 million metric tons of LNG annually beginning in 2014 – or about 8 percent of the global supply. Gorgon is owned and being developed by Chevron, Shell and ExxonMobil. Initial construction should be under way in February.

Beyond Gorgon, the U.S. Energy Information Administration reports Australia has 30 trillion cubic feet of proven natural gas reserves, of which about 70 percent are off the west coast in the Carnarvon Basin. Eight percent of the country’s proven reserves are in central Australia and 20 percent is off the southern shore. Domestic and international majors involved in developing these fields include Santos, Woodside, Chevron, ConocoPhillips, ExxonMobil and Shell.

Australia now has two LNG facilities, according to the EIA: the North West Shelf Venture and Darwin LNG. Gorgon is one of two major LNG projects in advanced planning or construction stages. In addition, Pluto, off the shore of Western Australia, is expected to come online in 2010. Gorgon alone is expected to cost more than $40 billion and will include subsea pipelines to Barrow Island, gas processing facilities, LNG shipping facilities and greenhouse gas management. A further LNG project, Wheatstone, also being developed by Chevron, will begin producing after Gorgon is under way.

Japan is Australia’s primary LNG market, but China, South Korea, Taiwan and India are also big customers, according to the EIA.

So far, Chevron has signed sales agreements with Japanese Chubu Electric, Osaka Gas, Tokyo Gas, GS Caltex and Korea Gas for sales of slightly less than 6.5 million metric tons of Gorgon LNG annually. Exxon has agreed to supply PetroChina with 2.25 million metric tons annually from Gorgon and India’s Petronet with 1.5 million metric tons annually, while Shell has signed with PetroChina for 1 million metric tons a year from Gorgon.

Contact Janet Nodar at jcnodar@bellsouth.net.