Chevron Corp. (CVX) said it made a natural-gas discovery off Western Australia's coast as part of the proposed 43 billion Australian dollar ($39 billion) Gorgon liquefied-natural-gas project.
Chevron Corp. (CVX) said it made a natural-gas discovery off Western Australia 's coast as part of the proposed 43 billion Australian dollar ($39 billion) Gorgon liquefied-natural-gas project.

Chevron said the Yellowglen-1 exploration well had struck a 137-meter gas column, marking its third discovery in the greater Gorgon area in nearly as many months, after strikes at the Satyr-1 and Achilles-1 wells.

Jim Blackwell, president of Chevron Asia Pacific Exploration and Production Co., said Tuesday that the Yellowglen-1 well was part of a "robust" exploration, appraisal and seismic program that the company has planned in Australia for this year.

Chevron operates the Carnarvon Basin area where the Yellowglen-1 discovery was made. Units of Royal Dutch Shell PLC (RDSA) and ExxonMobil Corp. (XOM) have 25% interests.

Paul Webber, a senior analyst for Australia at the IHS consulting firm, said Chevron hasn't provided enough information to determine how the Yellowglen-1 discovery compares with others. But he said recent discoveries would extend Gorgon's 40-year estimated life.

International energy companies have bet big on natural gas to capitalize on what they expect will be a surge in demand for cleaner-burning fuels. Australia 's stable political environment, substantial gas reserves and proximity to fast-growing Asian economies make it an attractive place to invest, particularly with U.S. gas prices low in the wake of a flood of domestic gas supply.

In October David O'Reilly, who was then Chevron's chairman and chief executive, said Australia by 2020 could drive profit for Chevron as much as U.S. operations do now.

Gorgon is the biggest of Chevron's proposed projects in Australia and will have an annual processing capacity of 15 million metric tons of LNG. Chevron, based in San Ramon , Calif. , owns around 47% in Gorgon and will operate the project. Shell and Exxon own 25% each.

Kyushu Electric Power Co. on Tuesday became the latest Japanese utility to agree to buy Gorgon LNG from Chevron. The utility plans to buy 300,000 tons annually from 2015 for 20 years. Kyushu Electric has also signed a preliminary agreement to take 800,000 tons a year of LNG from the Chevron-led Wheatstone project for 20 years, starting as early as 2016.

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