TheAge.com (Australia): Shell to sell gas to US in $10b deal: “Most of the gas will be used to satisfy Mexico's growing energy needs, with the excess to be exported to California in the United States, where there is also a requirement for new natural gas supply sources.” (ShellNews.net) 11 April 05
April 11, 2005 - 1:29PM
Australian natural gas exports to North America's energy hungry west coast could begin by 2010 after Shell committed to ship $US10 billion of gas through its Baja California terminal.
Australian liquefied natural gas (LNG) exporters have had difficulty cracking the lucrative North American market due to a lack of importing facilities.
But Shell committed to market its 25 per cent share of gas from the $11 billion Greater Gorgon project, off the coast of Western Australia, through its half-owned Energia Costa Azul terminal, currently under construction in Mexico.
The 7.5 million tonnes a year terminal will be the first LNG import facility on the North American west coast when completed in 2008.
Shell will initially market 3.25 million tonnes a year of gas from its Sakhalin Island project in Russia through the terminal.
But volumes from Sakhalin will drop after the first few years due to commitments to customers in other markets and be replaced with exports from Greater Gorgon from 2010.
Shell's commitment secures a market for up to 2.5 million tonnes per annum of LNG from Greater Gorgon over 20 to 25 years.
Most of the gas will be used to satisfy Mexico's growing energy needs, with the excess to be exported to California in the United States, where there is also a requirement for new natural gas supply sources.
The development path for Greater Gorgon was simplified last week after the three joint venture partners agreed to integrate their stakes in the various leases that make up the project, giving ChevronTexaco a uniform 50 per cent interest and operatorship, and leaving Shell and Exxon Mobil with 25 per cent each.
The deal provides the basis for development of the project area, which contains an estimated 40 trillion cubic feet of recoverable natural gas.
The joint venture plans to build two five billion tonnes per annum LNG trains on Barrow Island using gas sources from Greater Gorgon.
A final investment decision is likely in mid-2006.
Shell's Gorgon project director Andy Calitz said Shell was "very committed" to the development of Greater Gorgon.
"Securing this strategic position in the North American market provides a very tangible example of the benefits which the global reach of the Gorgon joint venture participants bring to Australian LNG projects," he said.
The Gorgon joint venturers are also actively targeting LNG markets in China, Japan and Korea.
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