Chevron's $54B Gorgon LNG Project Evacuated After Leak

(Bloomberg) -- Chevron Corp. evacuated workers at its $54 billion Gorgon liquefied natural gas development after a gas leak at the site, the latest problem for the Australian mega-project.

The plant, located on Barrow Island off Australia’s northwest coast, had a minor leak, Chevron said Friday in an e-mailed statement. The terminal, which is also partly owned by energy giants Exxon Mobil Corp. and Royal Dutch Shell Plc, still plans to load a cargo of LNG onto a tanker in the coming days, the company said.

“Another short delay is relatively inconsequential for a project that Wood Mackenzie estimates will generate cash flows of nearly US$7 billion a year for the partners over many decades,” Matt Howell, a Perth-based analyst for industry consultant Wood Mackenzie Ltd. said by e-mail. “But this latest event does introduce doubts about the facility’s reliability and ability to produce at capacity for that extended period.”

The largest resource development in Australia’s history faced delays, cost overruns and labor unrest during construction. It then started exports to customers in Asia amid the worst energy slump in a generation. The company in April temporarily halted output just two weeks after making the first shipment, citing a malfunction with the propane refrigerant circuit, used to cool gas supplied to the plant.

Production of LNG restarted this week, Chevron said June 27. The LNG tanker Marib Spirit has been sitting offshore Barrow Island since June 26, according to ship-tracking data compiled by Bloomberg.

After the leak, workers were told to leave at about 3 a.m. local time, Mick Buchan, state secretary for the Construction, Forestry, Mining and Energy Union in Western Australia, said by phone.

“The concern we have is there are issues around safety,” he said.

To contact the reporters on this story: James Paton in Sydney at jpaton4@bloomberg.net; Dan Murtaugh in Singapore at dmurtaugh@bloomberg.net To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net Aaron Clark, Abhay Singh

Copyright 2016 Bloomberg News.

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