Earlier this week, Chevron Corp. (CVX) – the second-biggest U.S. oil company – announced the discovery of a new offshore natural gas site (Achilles-1) in Western Australia ’s Carnarvon Basin . The discovery builds on the integrated energy giant’s leading position in this hydrocarbon-rich area and follows the Clio-2 and the Kentish Knock-1 finds in August.

Drilled to a total depth of 4,500 meters, the Achilles-1 well encountered 100 meters of net gas pay. The find is situated in the WA-374-P permit area (in the Greater Gorgon region), 160 kilometers off the coast of northwest Australia . Chevron Australia has a 50% operated interest in the prospect, with the other partners being ExxonMobil Corp. (XOM) and Royal Dutch Shell PLC (RDS.A).

We believe that the latest exploration success will boost Chevron’s growth prospects in Australia by adding to its already significant gas interests in the country (through majority holdings in the Gorgon and Wheatstone natural gas developments).

In particular, the drilling success at the Achilles-1 exploration well is expected to support an expansion of the Chevron-operated A$43 billion ($37 billion) Gorgon liquefied natural gas (LNG) project, which recently got the final go-ahead following the receipt of the necessary government approvals.

The Gorgon gas fields, off the coast of Western Australia , are estimated to contain 40 trillion cubic feet of gas deposits and have an expected economic life of at least 40 years from the time of start-up. Chevron said that the venture will have an annual capacity to produce 15 million tons of LNG, with the first shipment expected in 2014. The Gorgon joint venture partners (Chevron, ExxonMobil, and Royal Dutch Shell) have already entered into multiple deals to sell LNG from the project to China , India , Japan and South Korea .

As of now, the Gorgon project comprises three production trains and a gas plant, to be built in Barrow Island nature reserve. Within the next 12-18 months, the three partners are expected to take a call on expanding the number of trains to five.

San Ramon, California-based Chevron is one of the largest publicly traded oil and gas company in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals and other energy-related businesses.
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