Chevron faces possible fines for Gorgon LNG's emissions in Australia

MELBOURNE (Reuters) - Chevron Corp might have to pay penalties for carbon emissions from its huge Gorgon LNG plant off Western Australia after running into delays starting one of the world’s biggest carbon capture and storage projects.

FILE PHOTO: A Chevron gas station sign is seen in Del Mar, California, in this April 25, 2013 file photo. REUTERS/Mike Blake/File Photo

Western Australia’s environment minister is considering a recommendation made this week by the state’s Environmental Protection Authority to hold Chevron accountable for emissions from July 2016, when Gorgon LNG got its first operating license.

Chevron contended that the start of operations should be defined as when it reached a steady state in all three of its processing units at the plant.

“The EPA does not agree with the argument that operations do not commence until all stages of the proposals are constructed and operating at full capacity,” the agency said.

No date has been set for a final decision by Environment Minister Stephen Dawson on the EPA’s advice.

Dawson said in an emailed comment to Reuters he will consult with other ministers and make a final decision “in due course”.

It is too early to say what penalties Chevron might face if the minister agrees with the EPA’s advice, the minister’s spokeswoman said.

Gorgon is the biggest carbon emitter out of Australia’s 10 liquefied natural gas (LNG) plants, which have been the main driver of a rise in Australia’s carbon emissions over the past two years.

Chevron said it would be the lowest emitter of any LNG project in Australia once its carbon injection project was operating at full tilt, burying between 3.4 million and 4 million tonnes a year of carbon dioxide.

“We are committed to meeting our regulatory obligations and reducing greenhouse gas emissions from our operations,” a Chevron spokeswoman said in emailed comments.

Under the state’s authorization for Gorgon, Chevron was required to inject underground at least 80% of carbon dioxide removed during gas processing operations over a five-year rolling average.

The EPA was asked last year to recommend whether the emissions compliance date for Gorgon should be revised after Chevron failed to start injecting carbon dioxide as planned.

Chevron only began injections in August after resolving technical problems with the A$2.5 billion ($1.7 billion) carbon capture project.

Reporting by Sonali Paul; Editing by Stephen Coates