Gorgon liquefied natural gas project, Barrow Island, Australia

17th January 2014

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

  

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Name and Location
Gorgon liquefied natural gas (LNG) project, Barrow Island, Australia.

Client
The Gorgon Project is operated by an Australian subsidiary of Chevron (47.3%), in joint venture with the Australian subsidiaries of ExxonMobil (25%), Shell (25%), Osaka Gas (1.25%), Tokyo Gas (1%) and Chubu Electric Power (0.417%).

Project Description
The project is being constructed on Barrow Island, about 60 km off the north-west coast of Western Australia. It includes a three-train, 15.6-million- tonne-a-year LNG facility and a domestic gas plant with the capacity to provide 300 terajoules of gas a day to Western Australia.

The upstream scope of the project includes:
• drilling eight high-rate, big-bore development wells at the Gorgon field and ten at the Jansz-Io field;
• a subsea gas-gathering system and subsea pipelines that will deliver gas from the Gorgon and Jansz-Io fields, each located between 65 km and 130 km respectively off the west coast of Barrow Island;
• pipelines that run from the shore crossing on the west coast of Barrow Island across to the east coast, where they tie-in to the gas treatment plant; and
• a domestic gas pipeline that runs more than 90 km from Barrow Island to the Western Australian mainland where it will tie in to the existing Dampier to Bunbury Natural Gas Pipeline.

The downstream scope of work includes:
• a three-train, 15.6-million-tonne-a-year LNG processing plant;
• domestic gas processing plant;
• LNG and condensate storage;
• marine facilities, comprising a 2.1 km materials offloading facility and a 2.1-km-long LNG jetty;
• operations and maintenance buildings; and
• workforce accommodation village and associated infrastructure.

The carbon dioxide (CO2) injection project involves the design, construction and operation of facilities to inject and store reservoir CO2 into a deep reservoir unit, known as the Dupuy formation, more than 2 km beneath Barrow Island. This will reduce greenhouse-gas emission from the project by about 40%.

The Gorgon Joint Venture Participants are progressing environmental approvals for an expansion of the Project.

Value
$54-billion.

Duration
Plant start-up and first gas is planned for mid-2015. Domestic gas is expected to be delivered to the market in 2015.

Latest Developments
US energy major Chevron will increase the footprint of its Gorgon LNG project by about 10%, after the Western Australian Environmental Protection Authority (EPA) approved a 32 ha increase in the project, located on Barrow Island.

The proposal was assessed to determine if the existing conditions on the development could be applied to the revised footprint.

However, the EPA also recommended an additional condition to offset the significant residual impacts of clearing 32 ha of a Class A nature reserve, including habitat for specially protected fauna.

The EPA has recommended the proponent offset the impact to the area by extending the established threatened species translocation and the reintroduction programme for a further two years.

The programme will be extended from 12 years to 14 years.

The proponent has also committed to rehabilitate land within the development envelope when it is no longer required to support construction and operation of the Gorgon gas development.

The EPA’s report to the Minister for Environment has been open for a two-week public appeal period, which will close January 20.

Meanwhile, work continues to progress with the installation of all three amine absorbers, construction of the LNG Train 1 and acid gas removal unit (AGRU) Train 1.

Fourteen modules have been installed at the plant site and work continues on the civil and underground scope of work.

Work continues to connect the more than 180 pre-assembled rack (PAR) modules, which have arrived to date. Once complete, they will be the main artery of the LNG plant, carrying gas from one process unit to another.

Three of the five gas turbine generators are currently on their foundations at the plant site.

All four modules of the LNG Train 1 central pipe rack are on their foundations. The pipe racks are key components for process cooling within the LNG train.

The LNG tanks continue to take shape with the concrete pours for the outer shell progressing. The walls on LNG Tank 1 are on schedule and preparations are underway for its roof pour.

The project’s four condensate tanks are taking shape. The internal roofs have been partially raised and construction of the outer roofs on tanks 1 and 3 has started.

At the permanent operations facility, the operations centre, warehouse and laboratory buildings are the current focus of construction activity.

Construction activities have commenced on the 7 km pipeline for the carbon dioxide injection project.

Work continues on the 2.1 km LNG jetty. The roadway connecting the materials offloading facility and 43 caissons are in position.

Work continues to lift the PARS and jetty roadways into position.

More than half of the 54 PARs are installed. The PARs will transport LNG from the plant site to the two loading platforms at the end of the LNG jetty.

All subsea trees for the project have been delivered, with 12 of the 18 trees installed on the sea floor.

Key Contracts and Suppliers
Kellogg Joint Venture (JV) Group, comprising Clough, JGC Corporation and Hatch & Associates (front-end engineering, design and engineering, procurement and construction management contract); Hyundai Heavy Industries (modules and three preassembled units); Howard Porter (trailers); Toll Group (supply base and logistics services); Thiess, Decmil Australia and Kentz JV (construction village); Ertech (marine and onshore work, road improvements, earthworks, water facilities and telecommunications tower installations); Thiess (site preparation for the LNG plant, expansion of logistics infrastructure and temporary construction facilities); DB Schenker (integrated logistics services, including sea chartering services, air transport of freight and consolidation of materials and equipment); Agility Project Logistics (supply base operations and transportation services); Cobham Aviation Services Australia (operation of jets and aircraft); Bristow Helicopters Australia (helicopters); Osmoflo (reverse-osmosis (RO) desalination plants); Sinclair Knight Merz (SKM) (monitoring marine environment); Health Services Australia (medical services); BJ Services (precommissioning services); Aker Solutions (subsea umbilicals and associated equipment); Offshore Oil Engineering Company (fabrication of pipe-rack modules); McDermott International (preassembled racks and units, as well as the fabrication of subsea structures and spools); Air Products (cryogenic heat exchangers); MTU Detroit Diesel (standby power); Monadelphous (water treatment facility); China Offshore Oil Engineering Corporation; Monadelphous through KT Pipelines Services (transmission pipelines); Neptune Marine Services (dive and vessel support services); AGR Drilling Services, contracted by Van Oord Australia (excavation services on the Jansz Scarp); Noskab (power cables); Fairstar Heavy Transport (heavy transport vessels for modules); AJ Lucas (horizontal directional drilling); Boskalis Australia (dredging work and construction of material offloading facility); Westralian Engineering (maintenance, repair and refurbishment work for Boskalis Australia); and Theiss (miscellaneous civil work).

On Budget and on Time?
The plant’s expected cost estimated at $37-billion when it was launched in 2009, increased to $52-billion in 2013 and recently increased to $54-billion.

The project is also behind schedule, with some sections a year behind schedule. Inclement weather and labour shortages, as well as logistical delays, owing to the challenges of developing the project on a nature reserve on Barrow Island, have also contributed to the project being behind schedule.

Contact Details for Project Information
Agility Project Logistics investor relations, email investor@agilitylogistics.com.
AGR Drilling Services, tel +47 56 31 6000 of fax +47 56 31 6001.
AJ Lucas, tel +61 7 3363 7333 or fax +61 7 3363 7399.
Air Products, tel +1 610 481 8315 or fax +1 610 481 2729.
Aker Solutions, tel +47 67 51 3039 or cell +47 91 13 7194.
Boskalis Australia, tel +61 8 9327 1000 or fax +61 8 9226 0213.
Bristow Group, tel +1 713 267 7600 or fax +1 713 267 7620.
Bristow Helicopters Australia, tel +61 8 9478 3388 or fax +61 8 9478 3844.
Chevron Australia, tel +61 8 9216 4000, fax +61 8 9216 4166 or email gorgon.info@chevron.com.
Clough, tel +61 8 9281 9344 or fax +61 8 9481 6699, cell +61 417 451 724.
DB Schenker corporate communications, tel +49 201 8781 0, fax +49 201 8781 8334 or email info@dbschenker.com.
Decmil Australia, tel +61 8 9368 8877, fax +61 8 9368 8878 or email enquiries@decmil.com.au.
Ertech, tel +61 8 9302 6666, fax +61 8 9302 6100 or email ertech@ertech.com.au.
Fairstar Heavy Transport, tel +31 10 403 5333, fax +31 10 403 5344 or email fairstar@fairstar.com.
Hatch & Associates, tel +61 8 9410 3306 or fax +61 8 9410 3290.
JGC Corporation, email ir@jgc.co.jp.
HHI, tel +82 746 4775 or +82 746 7415, fax +82 746 4662 or email hhiir@hhi.co.kr.
Howard Porter, tel +61 8 9418 0000 or fax +61 8 9418 5383.
Kentz investor and public relations Elizabeth Rous, tel +44 20 3159 4000 or email elizabeth.rous@kentz.com; or Catríona Nugent, tel +353 52 61 22811 or email catriona.nugent@kentz.com.
KT Pipelines Services, tel +61 8 9250 2161, fax +61 8 9250 1024 or email info@kt.com.au.
McDermott International investor relations and corporate communications director Robby Bellamy, tel +281 870 5165 or email rbellamy@mcdermott.com.
Monadelphous, tel +61 8 9315 7429 or cell +61 457 539 985.
Neptune Marine Services, tel +61 8 9424 1111, fax +61 8 9424 1110 or email info@neptunems.com.
Noskab, tel +44 1 22 485 4100 or fax +44 1 22 485 4104.
Osmoflo, tel +61 7 3623 6800.
SKM, tel +61 8 9469 4400 or fax +61 8 9469 4488.
Thiess, tel +61 7 3002 9000, fax +61 7 3002 9009 or email feedback@thiess.com.au.
Toll Group, tel +61 3 9694 2888 or fax +61 3 9694 2880.
Van Oord Australia, tel +61 7 3369 1988, fax +61 7 3368 3904 or email loc.bne@vanoord.com.
Westralian Engineering, tel +61 8 9437 5455, fax +61 8 9437 5477 or email info@weseng.com.au.
Theiss media contact Alex Smith, +61 7 3002 9673 or email asmith1@thiess.com.au.

Edited by Creamer Media Reporter

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