Chevron plans next development phase at $50 billion-plus 'Australian icon'

US supermajor Chevron is planning for the third — and a potential fourth — development phase at its multibillion-dollar Gorgon gas project on Barrow Island, offshore Western Australia, which it refers to as an "Australian icon".

Gorgon Stage 3 (GS3), which has yet to take the final investment decision, would see new offshore fields brought on stream to help keep Gorgon’s three liquefied natural gas trains and domestic gas plant operating at full capacity for decades to come.

“We have to continue to develop into the future the gas fields that will feed this plant for the next 50 some-odd years,” says Danny Woodall, director of operations, Chevron Australia.

Chevron has seven discovered fields on its radar — Chandon, Chrysaor, Dionysus, Eurytion, Geryon, Semele and West Tryal Rocks — most of which lie in water depths exceeding 800 metres.

A key focus area for Chevron this year is determining the order in which it will develop these seven Greater Gorgon Area fields.

Upstream understands the operator will take time during this year’s scheduled shutdown of Gorgon Train 3 to further study what tweaks might need to be made to that liquefaction facility depending on the gas composition of the feed gas that it will be handling in future.

Activities to start development of the first of these seven backfill fields — all of which will be exploited via subsea infrastructure with no permanent above-surface offshore facilities — are proposed to commence in 2025. The development work will be staggered so not all seven will not be developed in a single campaign, with some of the fields potentially forming a future Gorgon Stage 4.

Planned activities to bring the fields on stream include drilling new wells and installing a subsea gathering network including flowlines to carry gas from the new fields to pipeline tie-in locations on the existing Gorgon and Jansz-Io 34-inch diameter feed gas pipelines to Barrow Island.

Australia’s offshore regulator National Offshore Petroleum Safety and Environment Management Authority (Nopsema) on 9 August opened Chevron's Gorgon gas development backfill fields Offshore Project Proposal (OPP) for public comment.

Nopsema noted that while the order of the development of the seven fields has not yet been finalised, subject to relevant approvals, Geryon and Eurytion have been earmarked as the next fields to be developed and are anticipated to be co-developed and use common infrastructure.

Current thinking is that the 24-month development drilling campaign involving these two fields will commence in the third quarter of 2026, with installation and commissioning of the subsea hardware commencing in Q3 2027 and production start-up scheduled in 2028.

The activity durations for the following individual fields will be similar to the durations for Geryon and Eurytion except for installation activities at Chrysaor and Dionysus which may take longer (15 months instead of 12 months) due to the presence of the scarp, according to the OPP.

Nopsema added it has determined the proposal meets the regulatory requirements for it to be published for public comment but has not yet considered the acceptability of the project and associated environmental impacts.

This will happen only once the consultation is closed and Chevron has considered and addressed issues raised by the public.

If the proposal meets all of the regulatory requirements and is accepted by Nopsema, further regulatory approvals from the regulator will be required, including environment plans, safety cases and well operations management plans before Chevron can start any activities.

Interested stakeholders have until 1 November to comment on the proposal.

No new trains

Chevron is the largest resource holder of gas in Australia, with gross discovered resources of 50 trillion cubic feet. However, despite these massive volumes, it has elected not to construct any additional liquefaction trains at Gorgon.

A company official confirmed to Upstream that the earlier-considered Train 4 and potential Train 5 are definitely no longer on its radar.

Meanwhile, Nopsema in May approved Chevron’s revised environmental plan for the installation and pre-commissioning of the subsea infrastructure and the pipeline modification work for the Jansz-Io Compression (J-IC) project, which is part of the original development plan for Gorgon.

Chevron in July 2021 took FID on the US$4 billion project that will employ proven subsea compression technology to enhance recovery at the Jansz-Io asset and maintain the supply of feed gas to Gorgon's LNG and domestic gas plants.

Chevron intends to install approximately 6500 tonnes of subsea structures, including a compression station, compression manifold station and associated foundations. The centrepiece of the J-IC project is a not-normally manned 27,000-tonne floating field control station (FCS) that will be tied to the seabed by 12 mooring lines around 10 kilometres from the subsea compression station.

The project also includes a 135-kilometre cable to supply power from Barrow Island to the FCS, power cables from the FCS to the subsea compression station, and an umbilical to transmit power and communications between the FCS and the existing Jansz facilities.

South Korea’s Daewoo Shipbuilding and Marine Engineering (now Hanwha Ocean) in early 2022 won the $545 million contract to construct the FCS — the main platform facility — for the Jansz-Io compression scheme. Delivery of the platform from Hanwha Ocean’s Okpo yard is scheduled for the third quarter of 2025.

Saipem has been awarded the transportation and installation (T&I) contract for this project and the Italian contractor will install both the FCS and the subsea compression system, which was engineered and built by Norway’s Aker Solutions.

Offshore installation of the compression and supporting infrastructure for the JI-C project, which will enable the future tie-in of other fields within the Greater Gorgon Area, is scheduled for completion by mid-2026.

The Gorgon field lies in water depths of some 200 metres about 130 kilometres offshore and some 65 kilometres from Barrow Island, while Jansz-Io is located around 200 kilometres off the coast of Western Australia in water depths of about 1400 metres.

Chevron last year started up Gorgon stage two (GS2) involving 11 additional wells on the Gorgon and Jansz-Io fields, plus the installation of more than 46 kilometres of production pipelines and 2840 tonnes of subsea architecture, including 11 vertical trees.

GS2 also included system upgrades on Barrow Island, a Class A nature reserve about 60 kilometres off the northwest coast of Western Australia where feed gas arrives at the Gorgon project via two trunklines, Gorgon and Jansz.

Gorgon LNG comprises three trains, each of which routinely produces above its 5 million tonnes per annum nameplate capacity. That translates to a typical sustained combined output of 15.6 million tpa, while production has reached at least 15.8 million tpa.

Between FID in 2009 and first LNG cargo in 2016, Chevron and its Gorgon partners invested some US$54 billion, of which 80% was spent on Australian goods and services.

Keeping the project going requires significant operating expenditure, and further investment is needed to develop future fields to maintain production levels.

Gorgon requires significant feed gas volumes of around 3 billion cubic feet per day to supply the trio of liquefaction trains plus the domestic gas plant that itself supplies around 300 terajoules (285 million cubic feet per day) of Western Australia customers. The Gorgon project, which operates at or very near full capacity every day, also produces condensate.

Gorgon typically ships an LNG cargo every 34 hours and since 2016 the project has shipped more than 1500 LNG cargoes, mostly to customers in the Asia Pacific region, with the lion’s share of the volumes being delivered to Japan, South Korea and China.

Chevron operates the Gorgon project with 47.3% equity on behalf of partners ExxonMobil and Shell, with 25% each, Osaka Gas with 1.25%, MidOcean Energy on 1% and JERA with 0.417%.

Combined with its Wheatstone gas and LNG project, also in Western Australia, Chevron currently accounts for approximately half of the state’s domestic gas supply.

Carbon capture

Chevron’s oil operations on Barrow Island are nearing the end of their life and the operator is moving into planning for their decommissioning, while the Gorgon liquefied natural gas and domestic gas project is coming into its prime.

The challenge at the Gorgon carbon capture and storage project is managing the pressure in the Dupuy formation where the gas is stored, which requires the water to be removed and reinjected slightly higher up than this formation.

“This is where we are having the challenges with our carbon capture and storage system. It is not the carbon capture or the storage [but] actually the pressure-management side,” explains Dave Fallon, general manager, energy transition, Chevron Australia.

“So, small amounts of impurities, predominantly sand, are clogging the water wells. Because of that we are taking less water out than what the system was designed to do, and that means we're having to store less carbon dioxide,” he says.

To help fix the system, Chevron has commenced its first optimisation project whereby it is re-completing the water wells so that they are more tolerant of small amounts of sand, as well as installing two additional injection wells.

Chevron is also installing permanent filtration facilities on Barrow Island to take the solids out of the water.

Once that is complete, the operator will be able increase water extraction and reinjection, while monitoring the reservoir and eventually increasing carbon storage.

However, until the CCS project is operating again at full capacity, Chevron, under an agreement with the Western Australia state government, will continue buying carbon offsets to make up the shortfall — currently around 2.4 million tpa — at a cost of tens of millions of dollars.