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Chevron’s $54B Gorgon Nat Gas Plant Shut Down Again

Shell LNG

Chevron’s $54-billion Gorgon liquefied natural gas plant in Australia was shut down for a third time since it launched in March, with sources telling news agencies that the downtime delayed shipments but did not cause any cancellations.

The shutdown was unplanned and caused by work on the facility’s acid removal unit, according to sources cited by Reuters, and was due to be put back online days later. However, with Chevron unresponsive to reporters’ inquiries, it remained unclear at the time of writing whether Gorgon was back up or remained offline.

The project’s acid removal unit also made the news in June, when it was thought to have been the cause of a long shutdown following a gas leak.

According to traders cited by Reuters, the latest shutdown did not lead to any cancellations of shipments, but has caused delays of five cargoes, which apparently helped to boost LNG spot prices temporarily.

For the third time in the last eight months, production at Gorgon has been shut down. In July, the plant was evacuated after a gas leak was detected.

In April, immediately after its first LNG shipment, Chevron had to stop Gorgon operations to address a malfunction in a propane refrigerant circuit.

Analysts have not placed much emphases on the Gorgon delays, with Wood Mackenzie noting in the aftermath of the July shutdown that given the project’s $7-billion-annual cash flow generation prospects for many decades, these temporary shut downs are insignificant.

The Gorgon plant is the largest in the history of Australia, and is a joint venture with ExxonMobil, Shell, Osaka Gas, Tokyo Gas and Chubu Electric Power. The project will handle 15.6 million-tons-per-year.

In the last week of October, Chevron announced that the second of three LNG production trains at Gorgon was now running at its full capacity of 5 million tonnes of LNG per year (110,000 barrels of oil equivalent per day).

By Julianne Geiger for Oilprice.com

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