Chevron Expects First Production from Gorgon LNG Project in 1Q 2016

Chevron Corp. indicated that first production from the Gorgon liquefied natural gas (LNG) project offshore Western Australia is expected in the first quarter of 2016, the company's top executive said Friday in a conference call on its earnings for the fourth quarter of 2015.

"System commissioning from train one is in the final stages with key process units starting up, a cooldown cargo delivered and system cooling underway. The first LNG production is expected within the next few weeks with first cargo anticipated soon after that," John Watson, Chevron chairman and CEO revealed.

The field operator will ramp up Train One of the Gorgon Project -- which had been delayed by cost overruns and labor issues -- in the months ahead. Gas for the Train One startup will be supplied from the Jansz-lo wells, which have been successfully flow-tested following positive initial performance indications.

Meanwhile, all modules for Trains Two and Three have been delivered to site and construction is progressing. Chevron has incorporated lessons learned from Train One to the remaining trains, with key milestones being achieved on schedule and start-ups are expected at approximately six-month intervals after Train One.

The startup of the Gorgon Project follows the final investment decision made by Chevron and joint venture partners in 2009 to go ahead with the development, which was estimated then to cost $37 billion and subsequently revised upwards to $54 billion.

Turning to the Wheatstone Project, which lies around 90 miles offshore Western Australia, Chevron expected that first LNG will flow around mid-2017. The upstream portion of the project, including hookup and commissioning of the offshore platform, is currently progressing.

The Wheatstone Project operator added that the trunkline for LNG development is ready for service and the final tie-in work is ongoing. Meanwhile six of the nine wells have been drilled and completed to offer sufficient well capacity for the project's first train. At the Wheatstone plant site, the operations center and LNG loading jetty are complete and tank hydro testing is ongoing. Chevron mentioned that initial module fabrication in Malaysia was delayed, as reported earlier.


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Chee Yew has covered the upstream and downstream sectors of the oil and gas industry in Asia for more than 15 years. Email Chee Yew at cheeyew.cheang@rigzone.com

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