July 30, 2009 / 7:13 PM / 10 years ago

UPDATE 1-Bechtel to design Australia's Wheatstone 1st phase

* Chevron picks Bechtel for first phase of big project

* Final investment decision on nearby Gorgon awaited

By Braden Reddall

SAN FRANCISCO, July 30 (Reuters) - Chevron Corp (CVX.N) has awarded a contract to design the first phase of its potentially massive Wheatstone natural gas project in northwest Australia, signaling its commitment to ambitious plans for the region.

Bechtel, the largest U.S. engineering firm, will handle the front-end engineering and design (FEED) for a domestic gas plant and two liquefied natural gas processing trains with 4.3 million tons of annual capacity each, Chevron said on Thursday.

The U.S. oil company said last year it would seek approval to process 25 million tons at Wheatstone. [nSYD397430]

The project is part of a huge building effort by oil majors in the area as natural gas becomes an even larger part of their energy mix and Australia emerges as a leading gas producer.

Wheatstone will process gas from Chevron’s wholly owned offshore Wheatstone field and the adjacent Iago field, which Chevron operates, for export and the Australian market. The final investment decision is expected in 2011.

“We are committed to moving forward our two big Australian projects — Wheatstone and the Gorgon development,” said George Kirkland, executive vice president for global upstream and gas at the San Ramon, California-based company.

Gorgon is a potential 15 million-ton-per-year LNG project that Chevron, Royal Dutch Shell Plc (RDSa.L) and Exxon Mobil Corp (XOM.N) are planning for Barrow Island, 60 miles (100 km) north of Wheatstone’s site at Ashburton North.

Shell’s chief executive said on Thursday it expects a final investment decision on Gorgon “shortly,” while Chevron has only said it would be made in the coming months. [ID:nSYD505676]

Houston-based engineering rival KBR Inc (KBR.N) landed the FEED contract for Gorgon, and said on Thursday it was targeting the region for growth. [ID:nN30330357]

Apart from Wheatstone, San Francisco-based Bechtel is also building a 5.2 million-ton-per-year LNG plant for a Chevron consortium in Angola, which is set to start up in 2012. (Reporting by Braden Reddall, editing by Gerald E. McCormick)

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