The number of people working on the Gorgon gas project on Barrow Island has jumped to 8,000, as project operator Chevron strives to meet its targeted start-up around the middle of this year.
The number of people working on the Gorgon gas project on Barrow Island has jumped to 8,000, as project operator Chevron strives to meet its targeted start-up around the middle of this year.
Chairman and chief executive John Watson told investors over the weekend that Chevron had no higher priority than the $US54 billion Gorgon development.
Speaking after the release of Chevron’s quarterly results on Friday night (Perth time), Mr Watson said Gorgon was 90 per cent complete and on track to meet the revised start-up schedule announced in 2013.
“We are targeting first gas into the system around the middle of the year and first LNG sales this year,” he said.
Mr Watson said the company’s second big project in Australia – the $US29 billion Wheatstone development - was 55 per cent complete, having made “excellent progress” and was on track for a start-up in late 2016.
His update on Gorgon followed delays and cost increases on the giant project, which has been affected by logistical challenges, industrial relations disputes and adverse weather.
The project’s original budget was $US37 billion and start-up was initially planned for 2014.
Mr Watson said the on-site workforce on Barrow Island had increased to a new high.
“We've got 8,000 people on the site right now,” he said.
“That's a little more than we might have told you in the past. We've brought in a bigger accommodation vessel and so we put more people on site."
In previous commentary, Chevron has stated that the project as a whole would employ up to 10,000 people, with up to 6,000 people on Barrow Island.
Mr Watson indicated that the major challenge was completing the liquefied natural gas (LNG) plant on Barrow Island, which is at the heart of the project
“We've made terrific progress on the upstream side; basically all 18 wells have been drilled, all upstream sub-sea infrastructure is in place. Pipeline installation is complete,’’ he said.
“So those things are good. We are working all those things very hard.
“We have got really mechanical, electrical, and instrumentation work that is in high gear, right now and we are basically milestone driven in commissioning and starting up systems right now. And that's really our focus.
“We are monitoring very closely contractor performance and productivity on the island. We are working with the unions on contracts and industrial relations.
“We have been able to manage through those things fairly well, and we are planning for a flawless commissioning and start-up process.”
The major contractor working on the LNG plant is CKJV, a joint venture between US company CB&I Constructors (65 per cent) and Irish company Kentz (35 per cent), which was awarded a $US2.3 billion contract in 2011 to cover structural, mechanical and piping (SMP) and electrical and instrumentation (E&I) work.
Mr Watson said Wheatstone, under construction near Onslow, was still within the original $US29 billion budget.
“We have had some ups and downs. Frankly, right now we are benefiting from currency movements. The Australian dollar I think is around $0.78, so we are benefiting from that,’’ he said.
“We've had some ups and downs there and have used some of the contingency in the project but we are still operating within that same appropriation request.”
Mr Watson said Gorgon and Wheatstone were both insulated from the steep fall in oil prices, as a result of sales contracts already secured.
“We will basically be at our target for sales. We will be between 75 and 80 per cent on Gorgon and 85 per cent for Wheatstone. So we feel in pretty good shape.”
In contrast, he said Chevron was significantly pacing its spending on the Kitimat LNG project in Canada, in which Woodside Petroleum recently acquired a 50 per cent stake.
“We obviously need good contracts that underpin new developments, so one of the projects that we are pacing until we can see conditions that will support a project is at Kitimat in Canada,’’ Mr Watson said.
“We are continuing with some of the work we have under way to delineate the resource and reach agreements with First Nations people and permitting and things of that sort.
“But we are significantly pacing the spend of that project and we will get alignment on it and have good alignment in early days with Woodside, which has replaced Apache.”
