Chevron cheered by its two projects

Pilbara News - - News - Peter Milne

The first two pro­cess­ing fa­cil­i­ties at the Gor­gon LNG project are oper­at­ing near ca­pac­ity and com­mis­sion­ing of the fi­nal train is un­der way, with pro­duc­tion ex­pected early in the sec­ond quar­ter, ac­cord­ing to Chevron chief ex­ec­u­tive John Wat­son.

Mr Wat­son told an­a­lysts last week that af­ter a dif­fi­cult 2016 Chevron saw a great year for pro­duc­tion from their “ter­rific” Gor­gon and Wheat­stone projects, as the com­pany spends $US2 bil­lion ($2.6 bil­lion) more on con­struc­tion.

“The only re­main­ing thing to do is to bring on the Gor­gon off­shore field, we’ve been run­ning on the Jansz field,” Mr Wat­son said of the two gi­ant gas sources un­der­pin­ning the $US54 bil­lion project.

Gor­gon shipped its first LNG cargo in March but the first train had many shut­downs through­out the year.

Mr Wat­son said lessons learnt from train one al­lowed train two to achieve more than 90 per cent ca­pac­ity within a week of its Oc­to­ber start-up.

The turn­around in the per­for­mance of the project has been dra­matic. This year 10 LNG car­goes have been shipped, com­pared with 29 in the eight months last year since train one started pro­duc­tion.

Mr Wat­son said Chevron ex­pected a full year of pro­duc­tion out of the first two trains.

He said Wheat­stone’s on­shore plant was mak­ing good progress with all mod­ules for the two trains in po­si­tion.

“On­go­ing hook-up and com­mis­sion­ing of the off­shore plat­form is the crit­i­cal path ac­tiv­ity,” he said, re­fer­ring to ad­di­tional work on the off­shore plat­form’s pip­ing sys­tems.

“We’ve sup­ple­mented our work­force on the plat­form, but it hasn’t changed our ex­pec­ta­tion of a midyear start date,” he said.

Wheat­stone train two is ex­pected to start six to eight months later.

Re­fer­ring to Chevron’s one-sixth stake in the North West Project, as well as Gor­gon and Wheat­stone, Mr Wat­son said: “Aus­tralia is a ter­rific as­set” with sub­stan­tial gas re­sources. How­ever, build­ing ad­di­tional trains at Gor­gon and Wheat­stone was not on the horizon.

“We want to re­ally get the most we can out of the gear and hard­ware we have,” Mr Wat­son said.

While there is a lot of ad­di­tional LNG sup­ply com­ing on in the short-term, the long-term de­mand for LNG was good.

Cus­tomers see LNG as bet­ter for the en­vi­ron­ment, like the se­cu­rity of sup­ply Aus­tralia of­fers and it is price com­pet­i­tive in many mar­kets, he said. “By 2025 or so peo­ple are look­ing at de­mand in­creases that could be 65 per cent or more.

“I don’t think we’re yet at the place where you’re go­ing to see a lot of FIDs taken on new projects but it’s been en­cour­ag­ing to see a bump-up in prices.”

One of those po­ten­tial new LNG in­vest­ments is Kiti­mat, the west coast of Canada 50/50 joint ven­ture with Wood­side. Mr Wat­son said Kiti­mat needed a sales con­tract to un­der­pin it.

“I don’t want to rep­re­sent that we’re very far along in those dis­cus­sions,” he said, cit­ing the eco­nomics of the project as the pri­mary rea­son.

The Chevron boss said he was very pleased with the agenda of the Trump ad­min­is­tra­tion.

“We have seen an avalanche of reg­u­la­tion over the last decade and putting a more bal­anced cost-ben­e­fit frame­work in place to as­sess the value of those reg­u­la­tions ... is quite pos­i­tive for our busi­ness,” he said.

Pic­ture: An­drew Probyn

The Gor­gon LNG pro­cess­ing plant pro­duces gas supplied to Syn­ergy.

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