Gorgon joint venture signs LNG supply deal with Shell

The owners of Western Australia's huge Gorgon gas field said they had signed a letter of understanding with Shell Eastern for both long and short-term supplies of LNG to Shell's proposed import and regasification terminal in Ensenada, west Mexico.
The deal follows the signing of a memorandum of understanding for the joint venture to supply ChevronTexaco Overseas Petroleum with at least 2 mm tpy of LNG for the North American west coast for 20 years from 2008.

The Gorgon joint venture is held by operator ChevronTexaco (57.14 %), Shell (28.57 %) and ExxonMobil (14.29 %).
"LNG imports are expected to play an increasing role in meeting North American gas demand and the Gorgon project is well placed to service that demand," said Paul Oen, general manager, Gorgon area gas. The joint venture is currently undertaking an environmental, social and economic study of the use of Barrow Island for the field's LNG facility.

ChevronTexaco already operates a 40-year-old oil production facility on Barrow Island, which is a Class A nature reserve administered by the state government of Western Australia. The government is expected to deliver an in-principle decision on access to the island in the third quarter of 2003.
Oen said the joint venture was confident it would meet the stringent quarantine management procedures required for the increased levels of activity on the island during the construction and operation of the LNG facility.

In July, the state's Environmental Protection Authority and Conservation Commission said they believed access to Barrow was not compatible with the island's environmental value, and recommended certain conditions on the access, should the government agree to it.
Gorgon contains over 40 tcf of gas, or around 25 % of Australia's total known reserves. The development would comprise investment of about A$ 11 bn ($ 7.2 bn) between now and the mid-2020s.