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After 2 False Starts, Chevron to Relaunch Massive Gorgon LNG Project

LNG Asia

After mechanical shutdowns in the immediate aftermath of its debut shipment of liquefied natural gas (LNG), Chevron is preparing to restart its US$54-billion Gorgon export facility in western Australia.

In April, right after its first shipment of LNG went out, Chevron was forced to shut down the project due to a malfunction of the propane refrigerant circuit.

The company now says that repairs on the first train are complete and the project will be restarted soon, though exports are still weeks away, with Chevron indicating June at the earliest.

Related: The Newest Metric For Gauging Stock Performance In The Oil Patch

"We confirm start-up activities are underway on Gorgon train one with a plan to safely resume production in the coming weeks," a Chevron spokesman told Reuters on Wednesday.

The project is a joint venture between the Australian subsidiaries of Chevron (47.3 percent), ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and Chubu Electric Power (0.417 percent).

The giant project will handle 15.6 million-tons-per-year. The first and third cargoes will reportedly go to Chevron, while the second and fourth will go to partners Exxon and Shell, respectively.

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Joseph Geagea, executive vice-president, technology and projects, said Chevron expected to reach full production at the first train within six to eight months, with the second and third trains starting six and, respectively, 12 months later. That first estimate is now presumably pushed back by an unknown number of weeks.

Also in May, Chevron said it expected to resume exports from its Angola LNG plant at Soyo after a two-year shutdown. Operations at the 5,2 million t/yr plant were suspended in April 2014, following a safety investigation into a pipeline rupture that caused a hydrocarbon vapor release.

By Charles Kennedy of Oilprice.com

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  • Bassam El Wazni on May 21 2016 said:
    It is a very hard time for Chevron. The capital cost of 54 billion US dollar for Gorgon project is very high while the LNG price is at its lowest level. If Gorgon Plant is fully operational, its total revenue at current energy prices will be no more than 4.4 billion US dollars per year.

    Comparing with Inpex's Ichthys project of capital cost of 38 billion US dollar and when it is fully operational at current energy prices, it will generate the same total revenue of about 4.4 billion US dollars per year. Hence the situation of Chevron is nearly twice worse than Inpex at the current energy market.

    Bassam El Wazni

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