Chevron will finish the year with both its Gorgon and Wheatstone LNG projects partly shut down due to safety concerns just as the LNG price soars to six times higher than its mid-year lows.
Chevron will finish the year with both its Gorgon and Wheatstone LNG projects partly shut down due to safety concerns just as the LNG price soars to six times higher than its mid-year lows.
The problems at both LNG facilities, which supplied more than 30 per cent of the WA gas market in November, were first spotted during routine inspections of pressure vessels.
Gorgon was the first to strike trouble in May when a routine inspection found thousands of cracks in eight propane-filled heat exchangers, or kettles, on the second of three LNG trains on Barrow Island.
Chevron and its main Gorgon partners Shell and ExxonMobil lost hundreds of millions of dollars as the shutdown, originally scheduled to finish in July, stretched until late November.
Pressure vessels are highly regulated and subject to frequent inspections due to the risk of small cracks, typically at welds, spreading and causing the release of pressurised and often flammable contents.
Train 1 is now being inspected, and it is understood the first propane kettle to be examined exhibited the same problem as was found on Train 2, increasing the chances of a worst-case outcome for Chevron in which all kettles on all trains will need repairs.
To carry out the repairs, workers are required to grind out the existing welds before re-welding the kettle components together correctly. The shutdowns of Train 1 and later Train 3 are expected to take much less than the six months taken for Train 2 due to lessons learned on the original repairs.
Australian Manufacturing Workers’ Union state secretary Steve McCartney said his members had worked “for months next to massive kettles of pressurised propane that could go off at any moment” and called for all trains to be shut down until repairs were completed.
The AMWU first raised these concerns in September. At the time, the Department of Mines, Industry Regulation and Safety said it was satisfied with the Chevron’s arrangements to keep the workers safe.
At about the same time Chevron confirmed the expected problem on Gorgon Train 1, it also found unexpected issues on the Wheatstone offshore platform that supplied gas to its LNG plant near Onslow.
Again, a planned inspection of a pressure vessel made in South Korea revealed concerns that required it to be shut down.
An anomaly was found on one of the platform’s two inlet separators: large heavy-walled pressure vessels that split the flow from subsea wells into gas and liquids.
A direction issued to Chevron by offshore safety regulator NOPSEMA said the defect had compromised the integrity of the separator and a failure could have resulted in a “Major Accident Event” that NOPSEMA’s regulations define as “having the potential to cause multiple fatalities.”
A Chevron spokesperson said NOPSEMA’s direction endorsed its plans to inspect vessels on the platform and respond to any findings.
If significant repairs are required on the Wheatstone platform, they are likely to be much more complicated that the Gorgon work on Barrow Island due to the lack of room on the cramped offshore facility. In particular, “hot work” such as grinding and welding may not be compatible with continued production.
One of the platform’s two processing trains is currently out of action while all heavy-walled pressure vessels on the platform are being inspected. An inspection of the other inlet separator did not reveal a similar problem.
Chevron is managing the two threats to its projects, worth $US88 billion ($116 billion), with a severely diminished team after it slashed hundreds of workers from its Australian workforce this year after the pandemic-induced collapse in oil and gas prices.
Prices have since recovered, with S&P Global Platts reporting the JKM spot price rising to more than $US12 per million Btu in December, up more than six-fold from an all-time low of $1.82 in April.
Production cuts will cost Chevron and its partners opportunities to sell into the buoyant spot market, and they may even have to buy high-priced spot cargoes to service their long-term contracts.
Gorgon and Wheatstone together also supplied an average of 325 terajoules a day of gas to the WA market in November, about 31 per cent of the state’s needs. Deliveries have not dropped in December.
“We continue to deliver LNG and domestic gas from across our portfolio to customers in Western Australia and the region,” the Chevron spokesperson said.
