Australia's Gorgon LNG Restarts

LNG Carrier
First Chevron Gorgon LNG Cargo Departs for Japan

By MarEx 2016-05-19 14:51:03

Chevron has begun to restart its Gorgon LNG export facility in Australia following an unplanned shutdown in April, the U.S. energy major said.

"We confirm start-up activities are underway on Gorgon train one with a plan to safely resume production in the coming weeks," a Chevron spokesman said on Wednesday.

The $54 billion Gorgon project shut down in April following technical problems, shortly after starting up first production.

Traders had thought the shutdown would help to support Asian LNG prices, but despite the loss of the expected new source of supply, spot cargo prices are still running at nearly 80 percent less than a peak hit in early 2014.

Sources said the facility's return to operation would be gradual, and that the next export cargo was still weeks away, possibly not until June or later.

Chevron had said on April 6, shortly after the facility was shut down, that a restart of the LNG export plant was expected within 30-60 days.

Gorgon's first cargo, shipped in March, was exported to Japanese utility Chubu Electric.

The Gorgon project on Barrow Island off the northwest coast of Western Australia is a joint venture involving the Australian subsidiaries of operator Chevron with 47.3 percent, ExxonMobil and Shell with 25 percent each, Osaka Gas at 1.25 percent, Tokyo Gas at one percent and Chubu Electric Power at less than 0.5 percent.

Gorgon will have the capacity to produce 15.6 million tons of LNG per year once all three production trains are operating.

The Gorgon Project is supplied from the Gorgon and Jansz-Io gas fields, located within the Greater Gorgon area, between 130 km (80 miles) and 220 km (136 miles) off the northwest coast of Western Australia. It includes a 15.6 MTPA LNG plant on Barrow Island, a carbon dioxide injection project and a domestic gas plant with the capacity to supply 300 terajoules of gas per day to Western Australia.

Gorgon was initially expected to cost $37 billion and start exports in 2014, but delays and soaring costs pushed the start-date back and the price tag up.

Gorgon is part of a huge expansion in Australian LNG production which, together with emerging exports out of the United States, contributed to a fall in Asian spot LNG prices since February 2014 from more than $20 per million British thermal units (mmBtu) to below $5 per mmBtu.