Major Issues Shutdown $54 Billion Chevron Gorgon

Published at 02:33PM - 01/04/16

Major issues shutdown US$54 billon Chevron Gorgon project, offshore western Australia, only a week after its first LNG shipment.

The setback looks to be one that will keep the development closed for some time, and cost Chevron and its partners a hefty sum, with some sources claiming the fix is likely to cost upwards of US$100 million.

Major Issues Shutdown Chevron Gorgon

Construction started on the mammoth development back in 2009, but multiple setbacks and staffing issues caused first production to be delayed by years and sent costs spiralling from US$37 to US$54 billion.

Chevron was finally able to announce first production, on behalf of the Gorgon Projects’ partners, on the 3rd March 2016, with the first shipment of LNG departing two weeks later.

Today, Chevron has confirmed that there is an issue at Gorgon, and that the second shipment of LNG will be delayed, adding that the problem lies in the propane refrigerant circuit on train 1 of the plant.

$100m Repair Bill

Australian media have claimed that sources from within Chevron have indicated that the refrigeration problem, will keep Gorgon from being able to loading any further LNG to vessels for some time, and that fixing the issue is likely to come with a repair bill north of US$100 million.

Chevron Gorgon Project, Barrow Island, Offshore Western Australia
Chevron Gorgon Project, Barrow Island, Offshore Western Australia

A spokesman for Chevon added that due to the design of the plant, although LNG refrigeration and processing is shutdown, gas continues to flow from the offshore Jansz-Io field and into Gorgon’s storage facilities.

Unhappy Partners

No comment has yet been received from any of Chevron’s partners in the development, although Australian media are reporting that the situation has caused some hostility between operators Chevron and its partners ExxonMobil and Shell.

The ownership structure of the development details that each cargo of LNG is delivered, to the customers of each partner, on a rotational basis. The rotation runs: Chevron, Shell, Chevron, ExxonMobil before moving back to Chevron at the start.   

Only one shipment has so far manage to leave the US$54 billon project.

Gorgon Project In Numbers Infographic
Gorgon Project In Numbers Infographic – Click To Enlarge