Chevron Australia pushes Gorgon LNG Train 2 restart to Oct from early Sep

Singapore — Chevron Australia has pushed back the planned restart of Train 2 at its Gorgon LNG plant in Western Australia to October, from a previous date of early September, saying it needs additional time to complete repairs of propane heat exchangers, the company said in a statement Sept. 3.

The oil and gas major is undertaking repairs to heat exchangers in which weld quality issues were found during scheduled maintenance in July. The train initially went offline May 23.

"Following our ongoing technical work, we are further refining our approach and have decided some welds in targeted areas will require additional work," Chevron said. "We have discussed our plans with the regulator and will maintain alignment on its requirements for inspections and repairs on the Gorgon heat exchangers and the sequencing of work on Gorgon Trains 1 and 3," it said, adding that insights gained from the Train 2 repairs will contribute to work on Train 1 and 3.

Gorgon LNG plans to shut Train 1 in early October and Train 3 in January 2021 for inspections. Chevron did not revise the T1 and T3 inspections timetable in its latest update.

Steve Emery, director for dangerous goods and petroleum safety at the Department of Mines, Industry Regulation and Safety confirmed in a statement that Chevron Australia has advised DMIRS that it had identified issues with weld repairs on Gorgon LNG Train 2.

"The company advised the department it is revisiting the repairs to the propane heat exchangers and that Train 2 would remain shut down. DMIRS remains satisfied with the current level of safety around Trains 1 and 3,” Emery said, adding that it is working with Chevron to assess any potential impact to the agreed inspection schedule for Trains 1 and 3.

Chevron previously said that based on its experience on Train 2, inspection, repair and restart on Train 1 could be around 45-90 days, and that the combined outcomes from Trains 1 and 2 would signal activity and timing on Train 3.

The three LNG train Gorgon plant located on Barrow Island off the northwest coast of Western Australia has a nameplate capacity of 15.6 million mt/year with each train equal in size at 5.2 million mt/year.

"We continue to provide natural gas to the Western Australian domestic market and LNG to customers under our contractual commitments,” Chevron said.

MARKET IMPACT

The announcement of the extension of Gorgon LNG Train 2 had a muted impact on prices in Asian trade on Sept. 3.

"Shell and Chevron would definitely have covered their shorts for October already, but this piece of news would still impact sentiment,” a Singapore-based trader said. Another trader said Shell was offering a mid-October delivery cargo on Sept. 3, indicating that they were not short of prompt LNG cargoes.

Other traders said that unlike previous instances of outage reports at Gorgon LNG when equity holders swept up spot LNG cargoes in tenders and on the bilateral market, this time around the equity holders appear to have managed their short positions well.

On Aug. 21, when Chevron announced the staggered maintenance schedule at Gorgon LNG, market concerns over a full outage of the facility were alleviated, and JKM fell from over $4/MMBtu to $3.850/MMBtu on Aug. 24.

In this period, Shell and Chevron were offering September and early-October delivery cargoes, which the market speculated were "buffer cargoes” that the portfolio players had procured beforehand in the event of a full shutdown at Gorgon.

(Recasts headline, first paragraph, adds comments from Chevron, regulators and market impact)