Shell green light for Australia LNG project

London - Royal Dutch Shell plc has given the go ahead to the Gorgon LNG project in Australia, 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.

The project will nearly double Australia's LNG output and includes construction of an LNG 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.