Gorgon gas project closer to production -

The giant $15 billion Gorgon gas project off the northern coast of West Australia has moved closer to production after the state government cleared the path for environmental approval.
Environment minister Mark McGowan has upheld an appeal from the Gorgon partners - Chevron Corp, ExxonMobil and Shell - against the WA Environmental Protection Authority's June 2006 advisory bulletin that recommended against the project's environmental plan.
Chevron's general manager of the Gorgon project Colin Beckett said the decision was a significant milestone for the company, which has been working to gain project approval for the past five years.
"The minister's announcement reinforces our view the environmental values of Barrow Island can be maintained while we develop and operate the Gorgon project," Mr Beckett told AAP.
Development of the Gorgon project hit a snag earlier this year when the WA Environmental Protection Authority rejected environmental approval for the construction of a gas processing plant on Barrow Island, due to a perceived risk to the threatened Australian flatback turtle.
Mr McGowan said the protection plan involved an additional $60 million commitment by Gorgon to a series of initiatives to conserve the flatback turtle population and protect other endangered species.
The plan involves a series of stringent conditions concerning dredging, quarantine and use of greenhouse gases.
Mr McGowan said the new environmental conditions were additional to an existing commitment by Gorgon to provide $40 million to the state to protect native plants and animals in other environments similar to Barrow Island.
Chevron said its environmental assessment was the result of more than three years' preparation and included the research and contributions of more than 100 experts and extensive community consultation.
The Australian Petroleum Production and Exploration Association (APPEA) welcomed the decision and said it proved the environment and major resource projects could coexist.
"This decision confirms that major oil and gas projects and the environment can coexist in a way that meets community expectations, both in terms of environmental management and economic development," APPEA chief executive Belinda Robinson said.
"This process, and the strict conditions set by the state government, will ensure the unique environment on Barrow Island remains a priority and is preserved for future generations."
Mr Beckett said the company would finalise the environmental conditions and complete studies into cost changes before delivering a final investment decision in mid-2007.
That decision was originally expected in the middle of this year but delays in securing environmental approvals stalled the decision.
The cost of the project is expected to increase from the $11 billion figure, estimated three years ago, with some analysts forecasting an increase to about $15 to 16 billion.
Over the past few years the industry has experienced higher prices on everything, ranging from labour to materials, with many developments facing cost increases.
The Gorgon project involves a two-train liquefied natural gas (LNG) plant and a domestic plant on Barrow Island, producing about 10 million tonnes of LNG annually.
"From the time we fire the starting gun, it will be about five years and then we'll be into production," Mr Beckett said.
Chevron has estimated the greater Gorgon area to contain an estimated gas resource in excess of 40 trillion cubic feet.
The company has made several promising discoveries in the Greater Gorgon area, which Mr Beckett said could add to the project down the track.
"These exploration discoveries give us a lot of confidence that we can grow the size of the project once we get the foundation project up and running," Mr Beckett said.
Chevron is the operator and the largest stakeholder in the Gorgon gas project, with 50 per cent, while ExxonMobil and Shell each hold 25 per cent.