Wheatstone Cost Blowout to Impact Woodside

Chevron said October 28 that it now forecasts the total project cost of Wheatstone LNG at completion to be $34bn, an increase of $5bn over the estimate in 2011.

The US major said that $5bn cost blowout was primarily because of late module delivery due to poor performance at one of the fabrication yards. Chevron further added that an under-estimation of the quantity of materials was another reason for increased cost.

The development would have an impact on Australian Woodside which October 31 said it will see an 8% rise on total capital costs on Wheatstone LNG project after Chevron announcement.  According to Woodside, the cost increase “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.”

Wheatstone LNG (Credit: Bechtel)

Woodside will provide forecast for 2017 capital expenditure in the fourth quarter 2016 report. The Perth based company has 13% stake in the project.

Chevron is expecting first LNG from Train 1 in mid-2017 with first LNG from Train 2 expected six to eight months later. The Woodside-operated Julimar project, which will supply gas to the Wheatstone project, recently completed all construction and commissioning work on schedule and under budget, the Australian firm said.

Wheatstone LNG is expected to contribute over 13mn boe of annual production to Woodside once both trains are fully operational.

Chevron said October 28 that at Gorgon, total Train 1 LNG production has been stable at an average rate of 110,000 b/d, which is about 5mn mt/yr. A total of 17 cargoes has been shipped to date and with both trains now running Chevron expects to ship an average of two to three cargoes weekly. Construction on Train 3 is progressing and first LNG is expected in the second quarter of 2017.

Chevron Australia has a 47% stake in Gorgon project and is the operator. 

Shardul Sharma