Environment minister David Templeman set 36 “stringent" conditions environmental conditions for the project, located on ecologically sensitive Barrow Island.

Among the government’s requirements, is that the Chevron-operated development includes carbon dioxide geosequestration and sets up expert panels to protect the environment of the island and surrounding waters.

The environment plan includes a new $A60 million extra commitment by Gorgon to conserve rare flatback turtles and other endangered species.

"The Minister's decision to issue state environmental approval for the Gorgon development proposal is an important project milestone," said Chevron Australia general manager for the Greater Gorgon Area Colin Beckett in a statement.

Chevron and its partners will incorporate the conditions into current design optimisation work, Beckett said.

Gorgon proposes to re-inject roughly 3 million tons per annum (MMtpa) of CO2 per year underneath Barrow Island. But the LNG plant will still emit as much as 4MMtpa of CO2 directly into the atmosphere.

The geosequestration is estimated to cost of about $A850 million in the first decade. But Gorgon costs have a tendency to blowout, and the project, first budgeted for $A11 billion, is now widely believed to be likely to cost at least $15 billion.

"Given the project's importance, the current high-cost construction environment and the need to be internationally competitive, we are doing as much work as possible to ensure this valuable Australian gas resource is developed responsibly, effectively and efficiently," he said.

The state environmental clearance rounded off a good week for Gorgon. On Tuesday, project partner Shell signed a multibillion-dollar sales agreement with PetroChina for 1MMtpa of Gorgon LNG over 20 years.

But the project’s third partner, ExxonMobil, has not yet made any Gorgon gas sales deals. If it is uncommitted to the scheme, this will be a bigger impediment to developing the resource than cost blowouts or environmental conditions.