AUSTRALIA

Chevron keen to get Wheatstone right: video

CHEVRON Corporation is determined not to make the same mistakes on Wheatstone as it has at the er...

Chevron keen to get Wheatstone right: video

While there is clearly still plenty work to do and cost pressures persist at Wheatstone, executives are not budging on altering the cost estimates for either Gorgon or Wheatstone despite delays on both projects.

Gorgon was last valued at $US54 billion ($71.04 billion) more than two years ago and Wheatstone at $29 billion, though Macquarie Group said the price for the latter could soar 14% to $33 billion after Chevron revealed at the start of 2016 that its start date would be delayed by about six months.

The $10 billion, 5.2 million tonnes per annum Angola LNG project cancelled an international supply tender in June just weeks after the plant at Soyo loaded its first post-shutdown cargo.

The plant was previously closed in April 2014 after a major rupture on a flare line.

Gorgon has also recently been hit by delays and outages, and has undergone a longer than expected shutdown period after a minor gas leak was detected on July 1 that delayed a number of planned cargoes.

Asked at the end of April where the costs on Gorgon and Wheatstone were expected to land given the delays, Chevron's executive vice president - technology, projects and services divisions Joseph Geagea said the company was "still operating under the same appropriation which we communicated to you previously".

"We do acknowledge we've seen cost pressures; but at the same time, these have been offset by favourable foreign exchange," Geagea said.

"We're working very hard to mitigate those cost pressures. Earlier this week we had a good review of that project, and we are very encouraged by the progress."

He said developments for both Gorgon and Wheatstone would benefit from all the learnings on the troubled Angola LNG and Gorgon Train 1.

"We're moving a lot of things in house," Geagea said.

"We're going to focus on design and engineering. We're going to ensure those designs. We're going to pick the right contractors. We're going to work hard on the right contracting strategy.

"The progress we make over the next eight to 12 months will be very important in terms of where we're going to end up. But for now, there's really no reason to change our view on the cost.

"Wheatstone is a huge resource base for us, and it is very important to deliver it."

Chevron upstream vice president Jay Johnson made similar comments earlier this week, saying the oiler was incorporating all the experience gained from Gorgon Train 1's construction, completion and initial operations into Train 2 and Train 3.

While Geagea conceded Chevron had seen cost pressures on Gorgon "… at the moment, really, we're not going to change the cost estimate that we have provided previously".

The just-released video dated for last month revealed that the Wheatstone and Iago gas wells are prepared for production, while the spool and flowline tie-ins were complete as part of the subsea diving campaign.

Geagea told analysts at the end of April that all nine development wells had been completed and the company expected to release the drilling rig in the "next few months" following well clean-up activities.

Offshore platform hook-up and commissioning are progressing on track and the company expects that work to be complete "well in advance" of plant start-up.

The video also reported that hook-up and commissioning activities are progressing on the Wheatstone platform, and showed an aerial view of the LNG plant site at Ashburton North, along with the export jetty, including LNG and condensate export loading arms.

The video revealed that Wheatstone Trains 1 and 2 were still under construction, nearly 10 months out from when the project is meant to go online.

Structural, mechanical and piping work continues on Train 1, as does the delivery of modules continues, with 21 of 24 modules now on site for Train 2.

This is an improvement from the 12 modules required for Train 2 start-up that were on site at the end of April when Geagea addressed analysts.

The video also showed condensate stabilisers, gas turbine generators, and the LNG storage tanks which are "nearing completion", though hydro-testing activities on those are complete.

The operations centre facilities are complete and the workforce has been mobilised, with the video showed the functioning control room, while laboratory commissioning and handover activities are also underway

Commissioning of the maintenance workshop and handover activities are also underway, as is the construction of 50 residential houses for operations workforce.

Geagea also said at the end of April that piping, electrical, and instrumentation work were "progressing well" at the plant site.

"Our plan reflects observed performance rates on other Australian LNG projects," Geagea said.

"Actual rates are currently on track with our plan, and the outlook for first LNG remains mid-2017.

"Train 2 construction work is also progressing on schedule."

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