LNG World News Staff Wheatstone LNG storage tanks (Image courtesy of Chevron)Chevron and its partners in the Wheatstone LNG project, including Australia’s Woodside, will have to splash more cash for the LNG project west of Onslow after the US energy giant announced a US$5 billion cost blowout.Chevron said last week, after announcing the company’s third-quarter results, that delays in module deliveries to the LNG project had resulted in an increase of Wheatstone project costs to 34 billion as compared to $29 billion in the original 2011 estimate.The 8.9 mtpa LNG plant that will consist of two liquefaction trains is still expected to start output in mid-2017, Chevron chief financial officer Pat Yarrington told analysts on Friday.“We now forecast the total project cost at completion to be $34 billion. Chevron’s share of the cost to complete the project is included in the $17 billion to $22 billion capital guidance range that we have previously communicated for the 2017 to 2018 years.According to Yarrington, Wheatstone modules were delayed due to “poor performance” at one of the fabrication yards.“The contractor was unable to effectively manage the size and the scale of the work scope that we had given. We recognized that somewhat early on, and we did end up redirecting some of the work to other yards. But even so, the modules were late,” she said.Discussing the Wheatstone cost blowout, he said that the second factor for such an outcome was an “underestimation” of the quantity of materials that were required for Wheatstone.“At the time we took FID on Wheatstone we had project engineering that was about 15% complete and so the rest was based on rules of thumb and factors. As we matured the engineering definition, the amount of quantities needed increased substantially, and so that was a secondary reason behind the cost increase.”Woodside responseAustralian LNG player Woodside, that has a 13 percent stake in the LNG project, on Monday played down the impact of the $5 billion cost blowout saying it had already updated its expectations of Wheatstone project costs when it bought the stake in the joint venture from Apache last year.“Woodside’s initial view is the cost update results in an increase in Woodside’s total capital costs of less than 8% in comparison to the guidance provided in February 2016. It is within the range of outcomes expected at the time of the acquisition of Apache’s interest in the Wheatstone Joint Venture and can be funded by existing cash and undrawn debt facilities, the company said in its statement.The Woodside-operated Julimar project, which will supply gas to Wheatstone, recently completed all construction and commissioning work on schedule and under budget, Woodside noted in the statement.Eighty percent of the Wheatstone project’s foundation capacity will be fed with natural gas from the Wheatstone and Iago fields, which are located about 200km north of Onslow off Western Australia’s Pilbara coast. The remaining 20 percent of gas will be supplied from the Julimar and Brunello fields.The gas will be supplied to the project’s onshore liquefaction and export plant located 12 kilometers west of Onslow in the Pilbara region.The Wheatstone LNG project is a joint venture between Australian subsidiaries of Chevron (64.14 percent), Kufpec (13.4 percent), Woodside (13 percent), and Kyushu Electric (1.46 percent), together with PE Wheatstone, part owned by Tepco (8 percent).
12 June 2021
Powered By Impressive Business WordPress Theme