Chevron to Resume Gorgon LNG Production

After a shaky start, US energy giant Chevron has confirmed that it will be resuming its Gorgon LNG production project located off the coast of Western Australia. Following an unplanned shutdown, the company expects to resume on-site production, with newly appointed chief Nigel Hearne fronting the comeback.

Despite the fact that the US$54-billion Gorgon project underwent a lengthy six-year construction period, the plant encountered crippling mechanical problems after its first LNG shipment. Teething problems with the propane refrigerant system halted production and forced engineers to kick-start emergency repairs.

Production back on track

The shutdown was a major setback, yet Joseph Geagea, Chevron’s executive vice president of Technology, Projects and Services remains optimistic. He estimates that it will take just six to eight months for the site to reach full production at the first and second trains, with the third peaking 12 months later.

Gorgon cited as Chevron lifeline

For Chevron, getting the Gorgon project back up and running is critical. While the multinational energy corporation does have a host of lucrative projects underway it recently announced plans to cut a further 1000 jobs, bringing its total redundancies to more than 8000. The news followed a first quarter loss of US$725 million, which had investors concerned. Pressure for Gorgon to perform was also heightened when Chevron revealed that its original budget of US$37 billion had spiralled to US$54 billion, a figure that far surpassed its original 2009 estimate.

Hearne fronts the Gorgon comeback

Now, the pressure is on for Hearne to step up to his role as the head of Chevron Australia. With a background in operations and refining, he’s made it clear that his top priority will be fixing the ongoing hurdles that have dogged Gorgon since construction commenced six years ago.

Not only will he be honing in on Gorgon, but Hearne will also be focussing on West Australia’s other major LNG venture, the Wheatstone LNG project. Due to commence production in 2017, Wheatstone has a budgeted completion cost of US$29 billion. While Chevron is confident their estimate will stay on track, industry sources are expecting an overrun.

"But for now, there's really no reason to change our view on the cost. And again, Wheatstone is a huge resource base for us, and it is very important to deliver it," says Hearne.  

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