MELBOURNE (Bloomberg) -- Australia approved Chevron Corp.’s A$50 billion ($42 billion) liquefied natural gas venture on a remote island, adding stricter conditions to quell environmental concerns about the nation’s biggest resources project.

The additional terms for the Gorgon project will enable it to proceed within a nature reserve “without unacceptable impacts,” Environment Minister Peter Garrett said in Canberra on Wednesday. Chevron has said the venture off the northwest shelf may produce its first LNG in 2014.
The decision clears one of the final obstacles to Chevron, Royal Dutch Shell Plc and Exxon Mobil Corp. building the venture on Barrow Island, 50 kilometers (32 miles) off the West Australian coast. Gorgon has contracts to supply fuel to China, India and Japan and is among more than 12 LNG projects in the region competing for Asian buyers.
“Gorgon is big and going to fill the available hole” for LNG demand, said Peter Arden, a Melbourne-based analyst at Ord Minnett Ltd., an affiliate of JPMorgan Chase & Co. “There’s a case for some of the proposed projects that if they don’t move quickly then it may get congested and some might not make it.”
The Gorgon partners will make a development decision after they win production licenses from the Australian government and development approvals from the Western Australian state government, Nicole Hodgson, a Chevron spokeswoman, said on Wednesday in an e-mailed response to questions.
----------Australia’s LNG ambition
Combined with Woodside Petroleum Ltd.’s Pluto project due to come on line in 2011, Gorgon would leapfrog Australia to second place behind Qatar among global LNG producers. Australia ranked sixth among LNG exporters in 2008, according to BP Plc’s 2009 statistical review of energy.
Gorgon will have capacity to produce 15 million metric tons of LNG a year, according to Chevron. Current Australian LNG output of 20 million tons a year may eventually reach 100 million tons, Peter Cleary, president of North West Shelf LNG, said this month, more than double Qatar’s current output.
Environmentalists have opposed developing Gorgon and an oil spill in the Timor Sea off the coast of Australia’s Kimberley wilderness region five days ago renewed concerns over exploration.
Australian Greens Senator Rachel Siewert attacked Wednesday’s decision, claiming Garrett is “signing off on the destruction of this unique environment.”
---------------‘Australia’s ark’
“Barrow Island is an A-Class Nature Reserve,” Siewert said in an e-mailed statement. “It has been dubbed ‘Australia’s Ark’ for its unique range of endangered species.”
The 202 square-kilometer (78 square-mile) island is a home to flatback turtles, along with the burrowing bettong, a type of small kangaroo that lives underground and has died out on the mainland. The government describes flatbacks as “vulnerable.”
Chevron must submit plans for approval covering the protection of animals such as the spectacled hare-wallaby, the bettong and the golden bandicoot among 28 additional conditions for the project, Garrett said on Wednesday.
The San Ramon, California-based company must set up a monitoring program to detect changes in the turtle population and take measures to avoid impact on flatbacks, particularly from light and noise, Garrett said.
The venture, which Chevron says has enough gas to last 40 years, will pipe the fuel to Barrow Island from 11 fields that contain about 40 trillion cubic feet, Exxon says on its Web site.
-------------Carbon capture
Carbon dioxide generated as the gas is turned into liquid form will be captured and stored underground, reducing greenhouse gas emissions by 40 percent, Chevron says on its Web site. The federal and Western Australian governments have agreed to jointly pay any long-term liability arising from this plan, Prime Minister Kevin Rudd said Aug. 17.
The ruling brings the three companies closer to building a venture that on Aug. 18 secured Australia’s record export contract with China at a time of tension between the countries. PetroChina Co. will pay Irving, Texas-based Exxon $41 billion over two decades for gas from Gorgon, the Australian government said Aug. 18.
China’s detention of Rio Tinto Group executives last month and a visit by Uighur leader Rebiya Kadeer to Australia have strained relations between the two countries. Stern Hu, an Australian passport holder, and three other Rio executives were detained for allegedly stealing commercial secrets.
--------------PetroChina, Petronet
Petronet LNG Ltd., India’s biggest importer of liquefied natural gas, also signed an agreement with Exxon to buy 1.5 million metric tons of the fuel from Gorgon, the company said Aug. 10 in a statement to the Bombay Stock Exchange. The venture also has accords to supply the fuel to Japanese utilities Tokyo Gas Co., Osaka Gas Co., and Chubu Electric Power Co.
Gorgon will generate about A$40 billion in revenue for the Western Australian and federal governments that will be used to build schools, hospitals and roads, Rudd said on Aug. 17. About 6,000 jobs will be created at the peak of construction, he said.
Western Australia will earn about A$100 million a year from Gorgon revenue, state Premier Colin Barnett said on Wednesday.
The Gorgon partners will buy about A$33 billion worth of goods and services and sell LNG valued at around A$300 billion to customers in the Asia-Pacific region over the next 20 years, Rudd said. Chevron estimates the venture’s contribution to Australia’s gross domestic product at A$64 billion, according to its Web site.
Chevron and its venture partners applied to resources and Energy Minister Martin Ferguson for production licenses on Aug. 18, Rudd said in Parliament on Aug 20.
-----------Timor Sea spill
“The Gorgon Project has been deliberately sited to avoid areas of particular conservation significance,” Roy Krzywosinski, managing director of Chevron’s Australia unit, said on Wednesday in a statement.
Western Australian Premier Barnett made the A$50 billion estimate of Gorgon’s construction costs in March, a figure that would make it the country’s biggest resources project. The venture has yet to release its own projection.
PTT Exploration & Production Pcl, Thailand’s only publicly traded exploration company, said it may take 50 days to stop an oil and gas leak about 250 kilometers from the coast in an area some 800 kilometers north of Barrow Island.
LNG is natural gas that has been chilled to liquid form, reducing it to one-six-hundredth of its original volume at minus 161 degrees Celsius (minus 259 Fahrenheit), for transportation by ship to destinations not connected by pipeline. On arrival, it’s turned back into gas for distribution to power plants, factories and households.