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Updated: Delay hits Wheatstone

CHEVRON announced last Friday that first cargo for its $29 billion Wheatstone project would be delayed by around six months, after it told the Western Australian government it would start up this year.

Updated: Delay hits Wheatstone

In a Wheatstone document called Start-up and Operations - Environment Plan Summary (DMP) dated January 22, Chevron said start-up activities were "planned to commence in 2016, and operation is expected to continue for approximately 30 years".

However, it added a caveat that "this timing and duration is indicative, dependent, in part, on the onshore facilities' demands, and thus is subject to change".

A spokesman for WA Premier Colin Barnett told Energy News that last Friday's announcement by Chevron CEO John Watson was the first his office had heard that Wheatstone would be delayed.

Woodside Petroleum told the Australian Securities Exchange this morning that the impairments foreshadowed in its last quarterly report already took into account the potential for this revised schedule for Wheatstone.

"The Julimar project, which will supply gas to the Wheatstone onshore plant, remains on schedule and on budget," the Perth-based oiler said.

"Woodside has a 65% equity interest in the Julimar project and is operator of the development. Delivery commitments under the applicable LNG Sales Agreements can be met under the revised schedule."

Woodside flagged up to $US1.2 billion ($1.7 billion) worth of write-downs on January 21.

Chevron CEO John Watson told analysts on Friday that hook-up and commissioning of the offshore platform for Wheatstone was progressing; while the trunkline was ready for service and final tie-in work was ongoing.

"Six of nine wells are drilled and completed offering sufficient well capacity for the first train. At the plant site, the operations centre and LNG loading jetty are complete, and tank hydro testing is ongoing," Watson said.

Chevron said in the updated environmental report that initial start-up and testing of the platform systems and equipment occurs before steady-state production.

"Initially, the trunkline may be used to transport ‘buy-back' gas from the mainland to the offshore platform for an initial low intensity pre-start-up period, which may last approximately one year prior to produced gas-condensate hydrocarbons being introduced to the trunkline from the platform for transport to the mainland," the report said.

"Should this occur, inert nitrogen preservation gas within the trunkline is expected to be displaced and purged at the platform in Commonwealth waters.

"Alternatively, the nitrogen will be purged to the onshore gas plant if buy-back gas is not required. Purging of nitrogen at the platform or at the gas plant are not in the scope of the EP, as this is managed under other regulatory processes."

In better news, Chevron is in for cash flow soon, as Watson announced its $54 billion Gorgon LNG project would finally start producing "within the next few weeks".

"Commissioning from train 1 is in the final stages with key process units starting up, a cooldowncargo delivered and system cooling under way," Watson told analysts.

"The first LNG production is expected within the next few weeks with first cargo anticipated soon after that. We'll be ramping up train 1 in the months ahead.

"On trains 2 and 3, all modules have been delivered to site and construction is progressing. Lessons learned from train 1 are being applied and key milestones are being achieved on schedule, with start-ups expected at approximately six-month intervals after train 1."

Watson said the LNG market was "lousy" at present, adding: "When you look at spot cargos and prices, I expect, as an industry, we're going to go through a challenging period for any volumes that will be sold spot into the marketplace."

Energy Newshas contacted WA mines and WA Premier Colin Barnett's office for comment.

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