Chevron Corporation plans to include a 300 terrajoule (TJ) per day domestic gas operation as part of its A$20 billion (US$17.61 billion) Gorgon liquefied natural gas (LNG) project offshore Western Australia, which would contribute significantly to the state's domestic energy supply.

The importance of securing new sources of domestic gas in WA was underlined recently when Apache Energy's Varanus Island gas processing facility was shut down after a pipeline explosion, slashing the state's supply by 370 TJ per day.

The state consumes about 1,000 TJ per day of domestic gas.

Chevron Australia general manager, greater Gorgon area, Colin Beckett said in a speech to potential suppliers to the project today that Gorgon would "incorporate a domestic gas phase as part of our foundation project".

"Under our state agreement [with the WA government], we were initially planning to submit a proposal for development of a 300 TJ per day domestic gas plant by 31 December 2010 but we now plan to accelerate this to coincide with our development proposals to Government for the LNG phase," Mr Beckett said.

"That means when we consider FID (final investment decision), we will consider FID for both LNG and domestic gas with the domestic gas plant ready for start-up to coincide at or around the commissioning of the project's third LNG train.

"Bringing on Gorgon's domestic gas phase earlier will increase the number of supply points for domestic gas into WA and has been welcomed by the State Government.

"In December, the project endorsed a change in scope from two to three 5Mtpa [million tonnes per annum] LNG trains and a final investment decision is expected after approval has been provided by the State and Commonwealth for the Gorgon project's third train proposal."

(C) 2008 Asia Pulse Pte Ltd