Chevron Corp. (CVX) said Monday its proposed Wheatstone liquefied natural gas plant will have a maximum annual production capacity of 25 million metric tons, which would surpass the Gorgon project as the biggest LNG development in Australia.

Developing the project at such a scale near the port of Onslow on the Pilbara coast, Western Australia, would reduce the need for future expansions by the company, and also "lessens the need for future LNG-related developments" nearby, Chevron said in a statement to regulators on the environmental impact of the Wheatstone project.

International energy companies are placing big bets 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. Chevron is also the operator of the Gorgon LNG project, which will have an annual processing capacity of 15 million tons of LNG and is utilizing reserves estimated around 40 trillion cubic feet of gas.

Chevron plans to build the Wheatstone plant in stages, but its comments Monday suggest the U.S. oil major is confident of tying up additional volumes of gas from third parties or discovering vast new stores of gas in its offshore permits in Western Australia.

More than 6 trillion cubic feet of natural gas reserves have been discovered by Chevron and partners Apache Corp. (APA) and Kuwait Foreign Petroleum Exploration Co., or Kufpec, that will feed the Wheatstone project.

San Ramon, California-based Chevron this month announced two new natural gas strikes in waters close to Onslow, which it said underpinned its LNG projects in Western Australia, including Wheatstone.

Its plans for Wheatstone are also attracting the attention of competitors, including BHP Billiton PLC (BHP), which have undeveloped discoveries in the same area and are looking for cost-effective ways to bring that gas to market.

BHP Billiton Petroleum President Mike Yeager said in May that an option under consideration for its Scarborough gas discovery was to work with Chevron's Wheatstone project. BHP declined to comment further when contacted by Dow Jones Newswires Monday.

In its environmental impact statement, Chevron said it remains on track to make a final investment decision on the Wheatstone project in the second half of 2011 and forecasts first gas production five years later.

The company has already concluded a string of offtake deals with North Asian consumers.

Last week, Korea Gas Corp. (036460.SE) signed a preliminary agreement with Chevron and partners to buy 1.5 million tons of LNG a year from Wheatstone over a period of up to 20 years.

Japanese utilities Tokyo Electric Power Co. (9501.TO), known as Tepco, and Kyushu Electric Power Co. (9508.TO) also have initial deals to buy LNG from Wheatstone.

The project includes a plant with a capacity of 625 million cubic feet of natural gas per day that will supply the domestic market, Chevron said. That's equivalent to around 15% of the project's LNG sales.

(Stephen Bell in Perth contributed to this article.)

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