The Gorgon project in Australia will be even larger than expected, with Chevron Corporation (NYSE:CVX) adding additional capacity to this massive liquefied natural gas (LNG) project.

Discount Brokers Comparison: Your one-stop shop for finding the perfect broker for your investments.

Overview
The Greater Gorgon project is 47% owned and operated by Chevron, with ExxonMobil (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS.A, RDS.B) each owning a 25% interest in this project. Osaka Gas, Tokyo Gas and Chubu Electric Company also own minor shares of Gorgon.

The Gorgon Project originally involved the development of the Gorgon and Jansz-Io natural gas fields located off the coast of northwest Australia. The natural gas will be transported to Barrow Island where Chevron and its partners planned to construct a three-train liquefied natural gas (LNG) facility with an annual capacity of 15 million tons.

Chevron will also build a natural gas processing facility here, with a capacity of 280 million cubic feet of natural gas per day. This output will be transported by pipeline to Australia for consumption by its domestic market. The company expects the project to cost between $37 billion and $43 billion and estimates that initial production from the Gorgon project will begin in 2014.

SEE: A Guide To Investing In Oil Markets

Expansion
Chevron now plans to add a fourth LNG train to the Gorgon Project, increasing its total capacity to 20 million tons per year. The company will develop the Geryon and Chandon fields to provide a supply of natural gas for this expansion. Chevron still needs to obtain regulatory approval for the fourth LNG train, which is expected to add an additional $10 billion to the cost of the Gorgon project.

Wheatstone
The Gorgon project is not the only LNG facility that Chevron is involved with in Australia. The company is also working on the Wheatstone LNG project, located in the same general area as Gorgon. Wheatstone involves the development of four offshore natural gas fields and the construction of a two-train LNG facility on the Australian mainland. The facility will have a capacity of 8.9 million tons per year and will also supply natural gas to the domestic market.

Wheatstone is operated and 72.14% owned by Chevron, with Royal Dutch Shell and Apache Corporation (NYSE:APA) having a 6.4% and 13% ownership interest in the project, respectively.

SEE: Oil And Gas Industry Primer

Other LNG Projects
Several LNG projects are under construction or being planned in the United States as the industry looks to deal with the oversupply of natural gas. Cheniere Energy (NYSE:LNG) and Cheniere Energy Partners, L.P. (NYSE:CQP) recently received final approval to build a four-train LNG export plant at an existing facility in Louisiana. The company initiated construction in August 2012 and expects this project to start up in 2015.

Sempra Energy (NYSE:SRE) also plans to build a LNG export facility in Louisiana and expects to start construction in 2013, with a planned start up in 2016. The Cameron LNG project will have a three-train liquefaction plant with an annual capacity of 12 million tons.

The Bottom Line
Chevron Corporation plans to add an additional LNG train to the Gorgon project in Australia and will also develop two additional offshore fields to supply natural gas to this project. This planned LNG facility and expansion is one of many that the company has under construction or in the planning stage.

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  2. Mutual Funds & ETFs

    ETF Analysis: iShares Morningstar Small-Cap Value

    Find out about the Shares Morningstar Small-Cap Value ETF, and learn detailed information about this exchange-traded fund that focuses on small-cap equities.
  3. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  6. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  7. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  8. Mutual Funds & ETFs

    ETF Analysis: WisdomTree SmallCap Earnings

    Discover the WisdomTree Small Cap Earnings ETF, a fund with a special focus on small-cap and micro-cap stocks with positive earnings.
  9. Mutual Funds & ETFs

    ETF Analysis: iShares US Regional Banks

    Obtain information and analysis of the iShares US Regional Banks ETF for investors seeking particular exposure to regional bank stocks.
  10. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  4. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  5. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  6. Net Present Value - NPV

    The difference between the present values of cash inflows and ...
RELATED FAQS
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!