(EnergyAsia, September 26 2011, Monday) — Chevron Corp is one step closer towards launching its US$25-billion Wheatstone project to develop an export-oriented liquefied natural gas (LNG) business out of vast gas reserves off the coast of Western Australia.

Last week, the Australian government’s Federal Environment Minister Tony Burke announced its approval of the proposed complex comprising two LNG trains with a combined 8.9-million-ton/year capacity, and a domestic gas plant for start up in 2016. The approval, which allows the project capacity to increase to 25 million tons a year, clears the path for Chevron and its partners to make a final investment decision by year-end.

The plant is located in Western Australia’s Ashburton North Strategic Industrial Area, about 12 km south of Onslow on the Pilbara coast.

The project’s owners include the Australian subsidiaries of Chevron (operator 73.6%), US-based Apache (13%), Kuwait Foreign Petroleum Exploration Company (7%) and Royal Dutch Shell (6.4%).

Chevron met more than 70 conditions set by the Australian government to limit the project’s impact on the environment in the Pilbara region.

“While I have considered the social and economic implications of this project, my focus has been on protecting environmental matters of national significance through strict conditions to manage any potential environmental impacts,” said Mr Burke.

George Kirkland, Chevron’s vice chairman, said:

“We welcome the Australian federal government’s support for the Wheatstone Project. The federal environmental approval is an important milestone in reaching the final investment decision for the project this year.”

Melody Meyer, president of Chevron Asia Pacific Exploration and Production Company, said:

“Wheatstone and the previously sanctioned Gorgon project position Chevron as a major LNG operator delivering energy, jobs and economic benefits to Australia, as well as helping to meet long-term demand growth for cleaner burning fuel in the Asia-Pacific region.”

Roy Krzywosinski, managing director of Chevron Australia, said:

“Wheatstone is one of Australia’s largest resource projects and is ideally situated to process natural gas produced by Chevron-operated permits, and third parties, from the prolific western Carnarvon basin, one of Australia’s most prospective areas for energy development.”

Apart from Wheatstone, Chevron is also investing US$37 billion to develop the giant Gorgon gas fields, also located off the coast of Western Australia, to produce 15 million tons of LNG a year by 2014.

Earlier, Chevron said the Wheatstone consortium had signed an agreement to deliver up to 700,000 tons of LNG a year to Kyushu Electric for up to 20 years.

Chevron said Kyushu Electric will also acquire 1.83% of its equity share in the Wheatstone field licences and a 1.46% interest in the natural gas processing facilities to be developed onshore near Onslow. Including the equity participation volume, Kyushu Electric will take delivery of 800,000 tons of LNG a year from the project.

John Gass, president of Chevron Gas and Midstream, said:

“We are pleased to build on our relationship with Kyushu Electric as a long term customer of the North West Shelf Venture and, more recently, as a customer of the Chevron-operated Gorgon Project. This sales and purchase agreement is an important milestone as we progress towards a final investment decision in 2011.”

Ms Meyer, president of Chevron Asia Pacific Exploration and Production Company, said:

“We are working with all levels of the Australian government and anticipate timely project approvals, which will enable a final investment decision to be made. Wheatstone will be one of Australia’s largest resource projects and once it is approved will create jobs and substantial economic benefits for the country.”

Chevron also has signed an agreement to supply Korea Gas Corp (Kogas) 1.95 million tons a year. In turn, Kogas has agreed to acquire a 5% interest in the project.