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Gorgon full output delayed until mid-2017

Screen Shot 2016-07-31 at 18.30.44Brian Robins: August 1 2016

A series of commissioning problems has delayed the timing of when Chevron Corp expects the giant Gorgon gas export project to be in full production, until well into 2017.

Since it began to bring the initial stage of the project on stream, it has encountered a series of problems that have forced it to halt processing from time to time, and it has now told analysts the first unit is operating at only a little over two-thirds of its rated capacity.

Production was halted for two months soon after the initial exports of gas, forcing Chevron to push back towards mid-2017 when it expects the project to be fully operational, from earlier this year.

When completed the $53 billion project will be able to export 15 million tonnes of liquefied gas annually from three processing plants which will have the capacity to process 5 million tonnes of gas annually.

“At Gorgon we are currently producing at 70 per cent of Train 1’s capacity, or approximately 90,000 barrels per day,” the executive vice-president of upstream for Chevron Corp, Jay Johnson, told analysts on Friday. “In early July, we took a short shutdown to address a number of issues and repair a minor leak. Production resumed mid-July, and the plant has been running smoothly since that time.

“We expect the first LNG from Train 2 early in the fourth quarter and from Train 3 in the second quarter of 2017.

“At Wheatstone, our outlook for first LNG remains mid-2017 for Train 1. Train 2 construction work is also progressing per plan, with start-up expected six to eight months after Train 1.”

Wheatstone is a second gas export project Chevron is building, also with estimated output of 15 million tonnes of liquefied gas annually.

Analysts queried the delay, but the Chevron official said when these large projects come into production it is “not so much that you’re on this smooth curve from start-up to full capacity, but … there are issues that have to be dealt with”.

“So you have periods of downtime as you go down to make modifications or fix some of the equipment that you have difficulty with on start-up – tuning loops, things like that. So it’s really a function of the downtime and the overall effect is a curve as you approach 100 per cent capacity,” Chevron’s Johnson told the analysts.

“So we still expect that six- to eight-month kind of a ramp-up period. But again with 2 and 3 and the benefit of the experiences we’re gaining on Train 1 – they are identical designs – it gives us a little bit of a head start in terms of that ramp-up for the second two trains.”

Other investors in the project include global oil majors Shell and ExxonMobil.

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