The production of liquefied natural gas at the Gorgon facility of Chevron Corporation (NYSE: CVX) stays suspended after nearly 2 weeks after the gas leakage incident, according to a Reuters report that cited Chevron spokesman Mr. Bradley Haynes. According to the energy corporation, it anticipated that the production of LNG at the mentioned facility will be back online during the “coming week.” Despite this statement, there are still no progress related to this matter.
On the 1st of July, the Gorgon facility located in Australia was closed because of a “minor” gas leak that was reported at the LNG plant. The workers in the Gorgon LNG facility were immediately evacuated in the Barrow Island. The Chevron spokesman stated that the energy giant is currently conducting minor repairs, while the production and overall business operations of the facility stay suspended.
Even during this time span, the San Ramon, California-based energy company exported its second cargo of liquefied natural gas overseas by the use of Marib Spirit tanker. The mentioned shipment occurred during the 3rd of July. Yet, Chevron did not ship through the Asia Excellence tanker on July 9 to July 11. This tanker, which was utilized to ship first cargo is presently anchored approximately 62 miles off the Gorgon LNG plant.
Baed on the monthly report on liquefied natural gas that was released by EnergyQuest, an energy advisory firm in Australia, 4 shipments are scheduled for the next months. However, we foresee that the suspension of operations for an extended period can distort the timeline for shipments.
Since the beginning of the facility’s construction, the Gorgon plant has experienced several drawbacks. These headwinds include delays in construction, cost overruns, as well as labor issues. At first, the Gorgon LNG project was predicted to cost approximately $37 billion. Despite this, the overall cost clocked in at $54 billion after a delay of 2 years.
Even after Train 1 was completed and the first cargo during the early part of 2016, the Gorgon facility was not free from setbacks. The mentioned LNG plant, which has a total production capacity of about 15.6 million tonnes of LNG each day, was shut down during the month of April because of some technical problems.
Chevron, Exxon Mobil, Shell, Tokyo Gas, Chubu Electric Power, as well as Osaka Gas are all partners in this LNG project. In the next months, this multibillion dollar project is set to become the largest supplier of liquefied natural gas. Moreover, the rest of the trains are likely to begin production by the end of 2017.
Wood Mackenzie, a metal and mining research and consultancy firm, forecasted that the Gorgon LNG facility will produce about $7 billion in cash flow for Chevron Corporation. However, the research and consultancy group also stated that the recent issues surrounding the Gorgon project trigger concerns regarding the reliability and the efficiency of the multibillion dollar venture.
As of 7:48 PM GMT -4 on July 12, the CVX stock is trading at $106.78, up by 1.32 percent or 1.39.