On a remote and ecologically sensitive island off Western Australia, one of the world's most ambitious energy projects is being built. It is hoped it will transform the country into a natural gas exporter to rival market leader Qatar.
The Gorgon liquefied natural gas (LNG) project on Barrow Island, operated and half owned by Chevron with large minority stakes held by ExxonMobil and Royal Dutch Shell, is being developed at cost of $43-billion (Australian) ($45.5-billion U.S.) making it Australia's largest single-resource project.
Gorgon may be the biggest but there are at least a dozen more LNG projects, including Browse, Prelude and Wheatstone that are either under construction or in advanced planning.
The frantic pace of investment in the Australian gas industry by many of the world's biggest energy groups has been spurred by rising energy demand in Asia, led by China, Japan and South Korea.
"We have a resource base in a really good neighbourhood," said John Gass, president of Chevron's gas unit, on a recent trip to Australia. "Australia is the epicentre for Chevron's natural gas portfolio."
"That is important because the Asia-Pacific market has the highest growth. It is expanding at several times the rate of other regions," he adds.
The latest World Energy Outlook from the International Energy Agency forecasts that China's demand for natural gas could rise by 5.9 per cent a year between 2008 and 2035, compared with a 0.5-per-cent annual rise over the same period for nations in the Organization for Economic Co-operation and Development.
At that rate, China will account for 8.7 per cent of global gas consumption by 2035, compared with 2.7 per cent in 2008.
Australia is regarded as a safe investment destination in spite of Canberra's high-profile battle last year with mining groups over a resources rent tax.
It is also well placed in the Asia-Pacific region to service the needs of China and other big customers.
Japan's strong interest in Australian LNG has increased further in the light of a review of its energy strategy after the Fukushima nuclear accident. This could spur Japan's Inpex to give the final go-ahead for its Ichthys project in Western Australia this year.
The world gas industry was given a further boost in May, when Germany said it planned to close its 17 nuclear power plants.
Craig McMahon, a Perth-based analyst with Wood Mackenzie, the industry consultancy, is skeptical whether all the projects being planned in Australia will reach fruition and believes some competing ventures will merge.
"There is a huge upsurge in projects, but it is highly unlikely that Australia will be able to deliver all to schedule. The projects will be operating within the confines of the [national] labour market."
The more advanced projects have the best prospects, he believes. "Gorgon has first-mover advantage," he says, "but the sheer scale of the project and the environmental provisions makes it a real challenge to deliver on time and budget." But Gorgon's backers believe that 18 months into its construction phase the project is on target to ship its first gas in 2014.
Chevron argues the challenges of the project, which include laying hundreds of kilometres of pipes on the ocean floor to carry gas back to the island for processing, are on a par with the building of the Channel tunnel.
Some 90 per cent of Chevron's share of Gorgon gas has been presold to Japanese and South Korean customers under long-term agreements, while Exxon has struck a deal with PetroChina for its portion.
"This investment is so huge that you would have to have confidence in the offtake [gas supply agreements concerning future production]," says Roy Krzywosinski, head of Chevron Australia.
In another sign of how gas is shaking up big energy groups, Chevron has also forecast that by the end of the decade, natural gas will account for 40 per cent of its oil and gas portfolio, from about 30 per cent now.
"That is largely driven by what is happening in Australia," Mr. Krzywosinski says.
To date, Australia has only two producing LNG projects, the Woodside-operated North West Shelf and ConocoPhilip's Darwin development, with a third, Pluto – another Woodside project – due to deliver its first gas later this year.
There are also at least four coal-bed methane to LNG projects being developed in Queensland in the east of the country that have been formally sanctioned or should be soon.
As projects come on stream, the Australian gas sector should lose its reputation for not always living up to its promise.
If output grows from the current 15 million tonnes a year to more than 70 million by the end of the decade, as analysts expect, it will secure a position as one of the world's leading producers.