Chevron’s Wheatstone LNG project costs skyrocket

Chevron Corp. has encountered a $5-billion cost blow-out with its Wheatstone LNG project in Western Australia (OGJ Online, Apr. 21, 2016).

The company said the project would now cost close to $34 billion to complete, a figure that dwarfs the most recent estimate of $29 billion for development.

Chevron cited the overheated construction market at the time work commenced on the project for part of the cost increase. Additionally, there have been difficulties in having key components of equipment built offshore.

There has been late module delivery due to poor performance at one of the fabricating yards where the contractor proved unable to effectively manage the size and the scale of the work scope.

Chevron also admitted that it had failed to estimate the quantity of materials needed for the project, in part brought about by taking the decision to proceed when only 15% of the engineering work had been completed. The rest was based on rule of thumb.

Wheatstone is scheduled to come on stream in mid-2017.

Chevron’s Gorgon project also suffered a cost blow-out of $17 billion prior to start of gas projection, but now has a more upbeat story with Train 1 producing LNG at a rate of 5 million tonnes/year along with 6,700 b/d of condensate.

Train 2 at Gorgon is now also on stream and ramping up to supply two to three export shipments a week. Train 3 is expected to come on stream in mid-2017.

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now

Whitepapers

Reach New Heights: Six Best Practices in Planning and Scheduling

These 6 best practices have created millions of dollars in value for many global companies. Learn...

Making DDoS Mitigation Part of Your Incident Response Plan: Critical Steps and Best Practices

Like a new virulent strain of flu, the impact of a distributed denial of service (DDoS) attack is...

The Multi-Tax Challenge of Managing Excise Tax and Sales Tax

To be able to accurately calculate multiple tax types, companies must be prepared to continually ...

Operational Analytics in the Power Industry

Cloud computing, smart grids, and other technologies are changing transmission and distribution. ...