Christopher Helman, Forbes Staff
Some call it Australia’s Galapagos, others Australia’s Ark. Barrow Island, 75 miles off the coast of Western Australia, was last connected to the mainland some 8,000 years ago. During those millennia of isolation this 90 square miles of grassy hills dotted with termite mounds and surrounded by coral reefs has evolved a collection of critters found nowhere else on Earth. Among the 24 endangered species unique to Barrow: the burrowing bettong, spectacled hare-wallaby, golden bandicoot, perentie lizard, pseudo scorpion and blind spider. In 1910 it was designated a nature preserve. Access to the island is severely restricted; all people and gear heading there must go through quarantine. Even a stray seed could disrupt the ecosystem. The accidental introduction of a cat or dingo would spell disaster.
Yet the island is also home to some 2,000 workers toiling for Chevron as they build the $37 billion first phase of an energy project called Gorgon. Like its mythological namesakes (Medusa was a Gorgon), the project is hydra-headed, and will involve dozens of wells drilled into giant offshore natural gas fields, subsea pipelines snaking gas back to Barrow and five giant plants to take 1.4 trillion cubic feet of gas a year, chill it into a liquid, then pump it into tankers. At an eventual rate of 25 million tons of LNG a year (and ultimate cost north of $50 billion), Gorgon will produce enough gas to power a city of 1 million people for 400 years. Chevron also plans to capture carbon dioxide from the natural gas stream and inject it into the earth a mile below Barrow’s hopping wallabies. If all goes as planned it will be the biggest carbon sequestration project in the world.
“Oil and gas can coexist with environmental stewardship,” says Roy Krzywosinski, managing director of Chevron’s Australia business. He’d better hope so. Spills like BP’s last year can be cleaned up by man and dissipated by the oceans. Barrow’s is a unique ecosystem that once broken cannot be restored. If they succeed in drilling here, working other Edens, like the Alaska National Wildlife Refuge, will be easy by comparison.
So how did Chevron get the, er, green light to build such an audacious project on such sensitive ground? The simple answer is that Chevron was grandfathered in. The company (and its predecessors) started producing oil on Barrow Island in 1964–315 million barrels and counting so far. Those decades gave ample time to perfect quarantine efforts, Chevron says, with the goal of preventing even a single seed or bug from infiltrating the sanctuary. There were only 27 quarantine breaches reported between 1964 and 2003, according to government records.
Not everyone’s convinced. Robin Chapple, a green-party member of Australia’s parliament, fears an erosion of care since Gorgon construction got under way. Revelations that earlier this year a handful of oilfield pipelines (damaged by hurricane-force winds and rain) leaked small amounts of oil onto the island weakened his faith further. “The myth of environmental best practices has been shattered,” says Chapple. While he concedes nothing can stop Gorgon from being built, he insists environmental practices can improve.
Chevron is trying. Every piece of equipment heading to the island is first staged on the mainland, inspected, then sealed in white plastic shrink-wrap to make it look like a creation by the artist Christo. There are flaps in the plastic where quarantine workers insert insecticide bombs to fumigate the gear. Where possible, only brand-new equipment is used in order to mitigate the chance it picked up seeds or spores. Workers, too, are monitored, their bags checked by sniffer dogs. “It’s like going to another country,” quips Krzywosinski.
That’s enough reassurance for many Australians. It’s frankly a challenge to rally opposition to a project on an island almost no one is allowed to set foot on in a territory four times the size of Texas but home to only 2 million people. Mining for iron, copper, gold and coal is the keystone of the Western Australia economy. Flush with cash from mining and energy projects (a unionized welder can bring home $500,000 a year), the citizenry is relatively sanguine about environmental damage. When the government recently allowed Woodside Energy to move hundreds of pieces of 10,000-year-old aboriginal rock art in order to make way for gas development, there wasn’t much of a fight.
Energy companies have found enough gas Down Under to inspire $200 billion in LNG projects. If they all get built, Australia could surpass Qatar as the world’s leading LNG shipper–and one that is half the distance to the hungry Asian market. Chevron holds $50 billion of its $290 billion in worldwide assets in Australia, according to Deutsche Bank analysis. Even before Gorgon is operational (first gas in 2014), Chevron hopes to have construction on another $10 billon LNG project called Wheatstone under way. “Every government wants to be the one to approve projects,” says Paul Gamblin, director of the Australian office of the World Wildlife Fund. “Questions are not asked too much of the environment.”
That doesn’t mean getting the nod for Gorgon was easy. The primary gas field, also called Gorgon, was discovered in 1981; since then a gargantuan 40 trillion cubic feet of gas has been identified nearby. In the 1990s former owner Ampolex floated the idea of having an LNG operation up and running by 2000. Once Chevron took over it pushed ahead, even preselling LNG supply and a tiny equity stake to Asian customers (Chevron holds 47%, with Shell and ExxonMobil at 25% each). Yet its early plans were panned by Australia’s Environmental Protection Authority in 2006, and the company had to tell customers they wouldn’t be getting gas by 2010 as contracted.
Politicians wanted the gas piped to the mainland rather than processed out on Barrow. But Chevron came up with a persuasive reason for insisting on using the island–carbon sequestration. The Gorgon gas has a high 14% content of naturally occurring carbon dioxide. Processing that gas in the traditional way would mean separating out the CO2 and simply emitting it to the atmosphere. Instead, Chevron looked for somewhere to put the CO2. “We recognized that it would be a large CO2 emitter and that we couldn’t just ignore the greenhouse gas emissions,” says Krzywosinski. “Carbon sequestration was inherent in the nature of the opportunity.”
Chevron determined the best place would be the Dupuy Formation, a geologic layer a mile beneath Barrow that contains a saline aquifer. Chevron spokesman Kurt Glaubitz insists no similarly suitable aquifer exists onshore. “We could have built on the mainland, but we wouldn’t have achieved the goal that Australia had desired. The geology just didn’t allow it.”
Chevron says it has spent $200 million engineering the plan. It calls for pressurizing the CO2 to the point of supercriticality, where it’s in between gaseous and liquid states and flows like vegetable oil. The industry has successfully engineered sequestration projects like this before, most notably at Statoil’s Snohvit gas field offshore Norway. But it hasn’t been done on this scale–Gorgon will push 3.4 million tons of CO2 underground annually.
Once injected into the aquifer, some of the CO2 will dissolve in the water, some will react with minerals in the rock and become forever trapped in solid form. Chevron’s computer models indicate that over 1,000 years the CO2 plume would spread out in a 2-mile radius from the injection points and migrate upwards by 200 feet or so, ultimately collecting beneath the lowest of five impermeable rock layers between there and the surface. Chevron has drilled 28 wells from which seismic sensors will monitor the CO2–and dispel paranoia that an escaping cloud of CO2 could waft across Barrow, suffocating animals.
No one is claiming the CO2 sequestration plan makes this a “green” project, though. While lots of carbon dioxide will go back into the earth, even more–4 million tons a year worth–will be generated by the energy-intensive liquefaction process and vented straight to the atmosphere. Couldn’t Chevron capture that CO2, too, and add it to the Dupuy? Too expensive, says Krzywosinski. It would make sense only if prices for carbon credits passed $100 a ton (the Aussie government is proposing a $25-per-ton tax for next year).
In 2007, after submitting a 3,000-page environmental impact statement, Chevron got approval to build Gorgon on 740 acres, 1.3% of Barrow’s area. Conditions include an order that no more than 3% of the coral reefs off the east coast of Barrow be destroyed by dredging to build a jetty to dock LNG tankers. Chevron must also work to reduce noise and light pollution, the better to protect flatback turtles, which nest on Barrow’s beaches and get confused by industrial light sources. Chevron is spending $65 million to monitor the turtles and support hatcheries on the mainland. It’s also been capturing and relocating Barrow’s fauna to reserves like Hermite Island, a similarly secluded former atomic-weapons testing ground. “And we will move them back,” says Glaubitz.
As for keeping animals and vegetation safe, so far 12,000 personnel have gone through quarantine management training. They’ve screened 94,000 passengers to the island (many for return trips) and 300,000 tons of equipment. Chevron spokesmen say a May 2010 report to the government, which revealed 60 quarantine breaches in eight months, was incorrect. They insist that there were only 4 “incidents” in that period and only 22 since construction began. Those that have occurred involved seeds, weeds, soil, bark and mold. Contaminants were in bags of sand, concrete blocks, a worker’s bed. One time a ladybug got through. Sounds minor, but weeds like buffel grass and milk thistle (which got on to the island decades ago) slowly crowd out native plants that animals rely on for cover and food. Drivers on the island are limited to 10mph to protect heedless lizards and marsupials.
Nonetheless, from September 2009 to April 2011 workers and observers have recorded the injury or death of 1,027 vertebrates– including 7 bettongs, 59 golden bandicoots and 54 spectacled hare-wallabies. Some of the casualties are natural, like turtle hatchlings dropped by gulls onto a construction site. In 2000, before the Gorgon project, there were 42 mammals and 11 reptiles reported killed by vehicles.
“The fact that they’re reporting things going wrong is not a badge of pride,” says politician Chapple. He insists there’s not enough third-party independent monitoring of Barrow and that the monitors there are conflicted by being housed, fed and transported by Chevron. “We allowed Chevron to go there on the basis that there wouldn’t be any problems. They need to live up to that commitment.”
Glaubitz says the company is doing everything that’s been asked of it and more. “There hasn’t been a quarantine event that hasn’t been controlled,” he insists.
Considering the regulatory grief, expense and environmental risks they face, it’s amazing that Chevron is on Barrow at all. But the lure of the Gorgon field proved too much to resist. “We pursue the projects with the most attractive returns,” says Glaubitz. Let’s hope their costs don’t rise.