Pro­ject costs grow

Pilbara News - - News - Peter Milne

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.

Pic­ture: Michael Wil­son

Con­struc­tion re­lat­ing to the Wheat­stone Pro­ject.

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