April 6, 2016
Chevron’s troubles with its over-budget and late Gorgon liquefied natural gas project have escalated, with technical problems forcing a shutdown after only one export shipment and production set to be halted for up to two months.
The problems with the system used to help cool gas during liquefaction in the first production unit, the only one that was in operation, required production to be temporarily halted, Chevron formally advised on Wednesday after reports had been circulating for several days of the unexpected shutdown.
Chevron said that based on initial findings from a team assessing the problem, the repair work is “of a routine nature” and all the required equipment and material are available on site.
Technical problems have halted production at Chevron’s Gorgon LNG project.
“A restart of the plant within 30-60 days is estimated at this time,” the US major said.
The $US54 billion ($55 billion) Gorgon venture in Western Australia has been plagued by problems during its six-years-plus of construction, and look to be continuing through the hugely complex start-up phase of the project, the country’s biggest single resources venture. The delayed first cargo finally sailed from the onshore plant site on Barrow Island on March 21 and was delivered to customer Chubu Electric Power in Japan on Wednesday.
Start-up problems are not uncommon with LNG trains, which are ramped up slowly so critical equipment can be checked, says Tony Regan, an LNG consultant at Tri-Zen International in Singapore. “From what information we have it’s not possible to identify what exactly is the problem and how serious it is, but this statement suggests it is not particularly serious,” Mr Regan said.
Although Chevron had suffered major start-up problems at its new Angola LNG project, it was premature to link the two, he said.
Chevron, the venture operator and 47.3 per cent owner of Gorgon, said it still expected the first production line, of 5.2 million tonnes a year, would ramp up to full capacity during six to eight months from the initial start-up on March 7.
Construction on the second and third production units on Barrow Island is not affected by the repair work being carried out on train one.
The problems at Gorgon come at an embarrassing time for Chevron, given the who’s who of the worldwide LNG industry are descending on Perth next week for the LNG18 conference, which will include presentations by the US giant’s chief executive, John Watson, and several of his international peers.
The start-up of the plant, along with several other huge LNG ventures also coming into production in 2015-16, has come just as LNG prices have fallen to their lowest for several years, pressured by the drop in crude oil prices and a supply glut that some analysts estimate will last for the rest of the decade. While that means initial revenues from the plants will be much lower than anticipated, the projects are designed to run for several decades.
Gorgon is owned 25 per cent each by ExxonMobil and Shell, and customers Osaka Gas, Tokyo Gas and Chubu Electric Power have small stakes.
Read more: http://www.smh.com.au/business/energy/chevrons-gorgon-lng-faces-twomonth-shutdown-20160406-gnzqj6.html#ixzz46ljpQyQw
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