No Production For Two Months Admits Chevron

Published at 09:18AM - 06/04/16

No production for two months admits Chevron, as the oil major moves to clarify the situation at its $54 billion Gorgon LNG development.

After more than six years of construction and spiralling costs, totalling an eye watering US$54 billion; Chevron was finally able to announce first LNG production from its mammoth Gorgon project back in March 2016, and its first shipment two weeks later.

However fast forward a mere two weeks, and reports started to emerge that the entire plant had shutdown due to an issue with a refrigeration system used to cool the produced gas into liquid.

Gorgon Shuts Down

In a bid to suppress growing speculation, Chevron released a statement admitting that there was an issue with the plant, connected to the propane refrigerant circuit on train 1. The company further admitted that the issue would mean a delay in achieving the developments second shipment.

Australian media later published claims from sources within Gorgon that the issue was no quick-fix, and far from cheap but, likely to cost in excess of US$100 million.

No Production For Two Months Admits Chevron

Today Chevon has moved to clarify the situation further stating that a restart of the plant could take up to 60 days.

A spokesman added: “Work necessary to complete the repairs is ongoing while the site team continues equipment inspection and assessment. Based on initial findings, the repair work is of a routine nature and all the necessary equipment and material is available on site.”

Train 1 is currently the only train to have been completed, preventing Chevron from liquefying and shipment any gas. When questioned on this the spokesman added: “Construction activities continue to progress on LNG Trains 2 and 3 with timing not affected by the work on Train 1.”

Major Issues Shutdown $54 Billion Chevron Gorgon

However, no comment has been made one the estimated cost of the fix.

Unhappy Business Partners

The ongoing issues are said to have caused dismay amongst Chevron’s biggest partners in Gorgon- ExxonMobil and Shell. Apart from the ongoing delays and spiralling costs, Both ExxonMobil and Shell are yet to see any return from the development.

Under the ownership structure of the Gorgon, each cargo of LNG is delivered to the customers of an individual partner, on a rotational basis. The rotation runs: Chevron, Shell, Chevron, ExxonMobil before moving back to Chevron at the start; with only one cargo yet achieved.

Greater Gorgon Development

Gorgon development produces from offshore gas fields, located between 80 miles (130 km) and 136 miles (220 km) off the northwest coast of Western Australia; whilst refining, refrigeration and liquefaction occurs at the Barrow Island plant 53 miles (85km) off the Australian mainland.

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Gorgon Project In Numbers Infographic
Gorgon Project In Numbers Infographic

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