Chevron warns of another delay at Gorgon LNG

(Australian Business Review; Aug. 3) - Chevron has warned that Australia’s biggest resource project, the $54 billion (U.S.) Gorgon LNG ­venture on Western Australia’s Barrow Island, is expected to be delayed again because of potential union disputes, equipment malfunction risk and the northern wet season.The project, which will export 15 million metric tons of liquefied natural gas a year, is set to come on line a year or two after its original target, while the budget, already $17 billion over expectations, is at risk.

Chevron also said there was pressure on the timetable of its $29 billion Wheatstone LNG project in Australia because of module construction delays in China. Chevron’s head of petroleum production and exploration, Jay Johnson, told investors July 31 that a 2015 target for first Gorgon exports would likely not be met. “The schedule is dependent on managing commissioning and start-up risks, including equipment malfunctions, possible labor and weather disruptions, as well as other unforeseen issues.”

The project is 47 percent owned by Chevron, the operator, with ExxonMobil and Shell each at 25 percent. When it was approved in 2009, it was expected to cost $37 billion and start exporting in 2014. But complications of building on Barrow’s Class-A nature reserve, an overheated construction market, workforce issues and a stronger Australian dollar for most of the construction have added to overruns and delays. The latest union dispute is around work schedules. Last month, the unions were given approval to strike.