Chevron doubtful about fourth train for Gorgon LNG project

Chevron Corp. Chief Financial Officer Patricia E. Yarrington has casts doubts on the fourth train expansion of the Gorgon LNG project in Western Australia.

Yarrington said the cost structure is different today than it was in 2009 when the first three trains were taken to final investment decision. She said the cost structure has “elevated” and that has put at risk some of Australia’s global competitiveness.

Yarrington also said the change in government had to be considered, adding that Chevron wants to see a “little bit of settling down and stability there.”

She said, “From a Chevron standpoint, we are going to look at Train 4 and assess it under those new conditions and look at it relative to other opportunities in our portfolio. Obviously Gorgon Train 4 has certain brownfield advantages, but we need to take those advantages, lay in the new macro-conditions that we see in Australia, and take a look at the whole portfolio activity,” she said.

Despite this, Chevron will continue with environmental approvals for Train 4. Chevron also wants to have 70% of Train 4 committed under long-term contracts by the time it reaches the FID point.

For existing construction work, Gorgon is 70% complete with 14 of the 21 LNG Train 1 process modules installed, three more in transit, and the remainder scheduled to follow rapidly.

Three of five gas turbine generators also have been installed at the Barrow Island facility, 43 of the 56 jetty caissons are installed, and mechanical completion has been reached for the gas pipeline.

Offshore the pipe lays are complete on the 30-in. Io-Jansz pipeline and three wells at Io-Jansz field are ready to flow gas. Seven wells have been completed at Gorgon field.

Chevron has sales committed for 65% of its share of Gorgon output.