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The Australian: Barrow doubt hits Gorgon

Jan 30th, 2006
by admin.

By Nigel Wilson
January 30, 2006
THE $11 billion Gorgon gas project faces big delays after warnings by its engineering advisers that placing the processing facilities on Barrow Island may be too costly.
Engineers are looking again at whether gas from the Greater Gorgon reservoirs in the Indian Ocean could be piped directly to the mainland – a solution previously dismissed as being up to $800 million more expensive than the Barrow Island option. The review is being undertaken amid concerns about higher costs, including those of meeting stringent environmental standards for the nature-protected Barrow Island.
Chevron and Shell, which own 75 per cent of the project, have negotiated preliminary sales agreements for 7.5 million tonnes of Gorgon liquefied natural gas output for delivery from 2010.
The project, to produce 10 million tonnes of LNG from two production trains, is in the final stages of assessment following a $100 million engineering and design program. But a full-scale engineering review of alternatives to Barrow could take several months to complete and most likely would involve further delays in seeking environmental clearances.
The partners, which also include ExxonMobil, have repeatedly said they expect to commit themselves to the project by the middle of the year.
“We don't comment on speculation,” a Gorgon spokesman said yesterday. But he added that the Gorgon development was not isolated from issues such as higher material and labour costs affecting other construction projects around the country.
Losing the Gorgon development would be embarrassing for the West Australian Government, which has promoted the project as a key part of a $40 billion investment program for the northwest, most of which remains unfulfilled.
It is understood that much of the engineering concerns revolve around the costs of meeting an unprecedented level of environmental protection and monitoring being demanded by the West Australian Environmental Protection Authority.
Barrow Island, about 60km off Western Australia's northwest coast, is a controversial site for an LNG plant, even though it is host to Australia's biggest onshore oil field, which has been producing for more than 40 years, attracting international recognition for its sensitivity to the environment.
It has been a class A nature reserve since 1911 – the highest form of conservation protection available in Western Australia. Barrow has internationally significant bio-diversity, including 24 known species or subspecies that occur only on the island.
The island is also a refuge for the Perentie, which is the world's second-largest lizard.
Environmentalists have long been opposed to an LNG plant on the island but in 2003 the West Australian Government legislated to allow the proponents to use up to 300ha of the island under strict environmental assessment.
In November public comment closed on a 2500-page environmental impact statement, the largest in Australia.
The proponents are responding to public submissions with the EPA scheduled to present its final advice to the Government within three months.
A main concern is the plan to dispose of carbon dioxide from Gorgon gas in a saline percolating aquifer deep below Barrow Island.
Critics say the ERMP does not contain adequate safeguards and monitoring processes for this untested carbon removal plan.

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