Chevron continues to push towards getting a second huge WA LNG project on the rails and underway.
The US-owned oil major said yesterday that it had reached agreement with a major Asian utility to take gas and a small equity stake in its Wheatstone project off the WA northern coast.
That’s the next project in the development pipeline for Chevron after the huge Gorgon project.
Chevron said the Korea Gas Corporation (KOGAS) has signed a 20-year agreement to purchase liquefied natural gas (LNG) from the Wheatstone project.
KOGAS is said to be the largest LNG buyer in the world, and will purchase 1.5 million tonnes of LNG per annum for 20 years.
In addition to being a foundation customer of the Wheatstone project, KOGAS signed an equity Heads of Agreement to acquire a 5% interest in each of Chevron’s Wheatstone field licenses and in the Wheatstone project LNG and domestic gas processing facilities.
Chevron said that including this equity participation, KOGAS plans to take delivery of a total of approximately 1.95 million tonnes of LNG (MPTA) a year from the Wheatstone project.
All up the two parts of the deal are said to be worth arould $19 billion at current LNG prices.
Chevron Australia managing director, Roy Krzywosinski, said the agreement demonstrated successful coordinated LNG marketing for the Wheatstone foundation project.
“The Wheatstone hub at Ashburton North has been established to process our significant equity gas as well as third-party natural gas resources located in the Western Carnarvon Basin,” Krzywosinski said.
Front-end engineering and design is currently being completed on the Wheatstone project ahead of a planned final investment decision in 2011.
In September of last year, KOGAS and Chevron also agreed to an agreement for the delivery of 1.5 MTPA of LNG from the $43 billion Gorgon project for 15 years, with an option to extend the agreement for an additional five years.
In October 2009, Chevron said it had signed a binding agreement with Apache Julimar Pty Ltd., a subsidiary of the Apache Corporation, which will assume a 16.25% equity interest in the Wheatstone project, and with KUFPEC Australia (Julimar) Pty Ltd, a subsidiary of the Kuwait Foreign Petroleum Exploration Company k.s.c., which will assume an 8.75% interest in the project.
Both companies (Apache and KUFPEC) have gas fields in the Wheatstone area which they will contribute to the Chevron project, in except for the equity interests.
The latest announcement for Wheatstone comes just under a week after Chevron reported another big gas strike in the area.
The Sappho-1 exploration well is located in the WA-392-P permit area approximately 140 kilometres (87 miles) northwest of Onslow. The well was drilled to a depth of 4,696 metres (15,406 feet) and encountered approximately 75 metres (246 feet) of net gas pay.
George Kirkland, vice chairman, Chevron, said, "The Sappho-1 discovery is another example of the success of Chevron’s significant exploration investment in northwest Australia and will support our long-term plans to build a leading natural gas business to supply energy to Australia and the Asia-Pacific region."
Jim Blackwell, president, Chevron Asia Pacific Exploration and Production Co., said, "This is the latest in a succession of back-to-back discoveries that underscore our exploration capabilities. These discoveries will underpin the Gorgon and Wheatstone projects."
Chevron, through its Australian subsidiary, is the operator of WA-392-P with 50% interest, while Shell Development (Australia) and an Australian subsidiary of ExxonMobil each hold 25%.
And in early July, Chevron reported another gas strike from a different structure, but in the Carnarvon Basin.
The Clio-3 discovery well is located in the WA-205-P permit area approximately 150 kilometres northwest of Onslow. Situated in 3,186 feet (971 m) of water and drilled to a depth of 14,137 feet (4,309 m), the well penetrated approximately 260 feet (79 m) of net gas pay. Clio-3 marks the third consecutive discovery on the Clio structure.
Jim Blackwell, president, Chevron Asia Pacific Exploration and Production said “We expect this discovery, together with our previous discoveries in this permit area, to underpin expansion opportunities at the Wheatstone liquefied natural gas hub.”
Chevron, through its Australian subsidiary, holds a combined 66.66% interest, while Shell Development (Australia) holds the rest.
Chevron said more tests are being conducted on data gathered from the discovery well, and additional work will be required to determine the extent and commercial viability of the discovery.
