Project costs grow
Chevron and its Wheatstone partners, including Woodside, will need to cough up more cash for the delayed LNG project after the US multinational announced a $US5 billion ($6.57 billion) cost blowout.
A week after Woodside told shareholders it was expecting no changes to its costs at Wheatstone, Chevron chief financial officer Pat Yarrington told analysts the bill for the project was now expected at $US34 billion ($44.9 billion) — 17 per cent more than its original estimate. In January, Chevron chief executive John Watson blamed a Malaysian module yard for pushing first LNG production back six months.
Late modules were now a primary driver for the cost increase, Ms Yarrington said.
A secondary reason, also experienced on the Gorgon project, was an underestimation of the quantity of materials required, she added.
“At the same time, we took a final investment decision on Wheatstone, we had engineering at about 15 per cent complete so the rest was based on rules of thumb and factors,” Ms Yarrington said. Design for the Wheatstone LNG plant was mainly performed in Houston. Gorgon’s design was based in London.
“All modules for train one and train two are now on site, and the installation of piping, electrical and instrumentation continue as planned,” Ms Yarrington said.
However, there is better news for Chevron’s Gorgon project as the second of three trains starts producing LNG on Barrow Island. Ms Yarrington said Gorgon’s train one was producing about 5 million tonnes a year to combine with train two.
Construction relating to the Wheatstone Project.