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Oil Markets Unmoved By North Korea Summit

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Today’s North Korea summit, and…

Australia Goes After Chevron For Gorgon Carbon Capture Delay

Papua LNG

The government of Western Australia has started an inquiry into a delay in the implementation of a carbon capture program at the massive Gorgon LNG project operated by Chevron.

The state’s Environmental Protection Authority has nine months to investigate why Chevron has been slow to begin capturing and burying at least 80 percent of the carbon dioxide that gets released as part of the normal operation of its gas processing facility on Barrow Island, Reuters reports, citing an emailed statement from the minister’s spokeswoman.

The inquiry follows Chevron informing the WA government last December that it will only be able to begin capturing and injecting carbon dioxide at the Gorgon field in the last quarter of 2018. The company cited problems with the equipment during the construction of the infrastructure for the US$1.9-billion carbon capture and injection system. It is the largest carbon capture and storage project in the world.

The Gorgon LNG project is worth US$54 billion and has an estimated productive life of 40 years. The CCS installation was a condition set for Chevron and its partners—Shell, Exxon, Osaka Gas, Tokyo Gas, and JERA—by the Western Australian government before it approved the project.

Yet the project is also Western Australia’s biggest emitter of carbon dioxide equivalent, at 8.3 million tons annually. It has three liquefaction trains with a combined capacity of 15.6 million tons of LNG per year.

“It has become apparent there needs to be a clearly defined start point for the commencement of the five-year rolling average,” WA’s Environment Minister told media. The five-year rolling average is the basis for the calculations of carbon dioxide capturing and storage.

Last month, Chevron approved an additional investment of US$3.8 billion (A$5.1 billion) for the Gorgon project. The money will be used to drill more wells and set up more pipelines on the seabed to prolong the life of the project.

Yet the company is in no hurry to start building the CCS installation as, according to a Chevron spokeswoman, the company is taking the long-term view, aiming to first make sure that the installation is commissioned properly and capable of achieving the high percentage of capture and storage stipulated in the government’s conditions.

By Irina Slav for Oilprice.com

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