Chevron Corp. plans to shutdown Train 1 at the Gorgon liquefied natural gas (LNG) plant in Australia to inspect for damage after the second train is placed back online, a spokesperson said Thursday.
Chevron, which operates the three-train facility and has a 47.3% stake, is progressing on repairs to Train 2, which was shut in May after welding cracks were discovered. The restart of the unit is set for early September. The Train 1 shutdown would likely begin after starting up the second train. If repairs are needed for the first train, it could be offline for up to three months, a spokesperson told NGI.
Combined capacity of the trains is 15.6 million metric tons/year (mmty), equivalent to about 2 Bcf/d.
A plan to inspect and potentially repair Train 3 would be developed based on the outcomes of repairs to the other trains, the spokesperson said. All three trains were built in the same fabrication yard in South Korea, with the first two beginning operations in 2016, and with Train 3 starting up in 2017.
The plan for inspecting Train 1 was developed on Thursday in cooperation with Australia’s Department of Mines, Industry Regulation and Safety.
“The appropriate safety measures are in place and we continue to deliver LNG to customers and natural gas to the Western Australian domestic market under our contractual commitments,” the spokesperson said.
The second train was scheduled to be placed back online in July after routine maintenance, but welding issues were found when it was inspected on May 23.
“What we found in the Train 2 propane heat exchangers or kettle, some call them, we saw some weld defects,” upstream chief Jay Johnson said in late July during Chevron’s second quarter earnings call. Johnson said at the time the other trains were operating normally.
The problems at Gorgon have helped support Asian spot LNG prices, which have reached record lows this year because of the Covid-19 pandemic, Poten & Partners’ Jason Feer, global head of business intelligence, told NGI.
“It’s taken more than 1 million tons off the current market just as demand is rising and the market is coming into balance a bit more,” Feer said. “The outage should be offset by more U.S. supply over the next month or two as the arbitrage improves.”
Hot weather in the United States and Europe has also helped support prices recently, Feer said.
Gorgon shipped 11 cargoes in July with a combined volume of 730,000 metric tons of gas, or 55% of the plant’s capacity on an annualized basis, according to Australian consultancy EnergyQuest. Gorgon exported eight cargoes in June with a combined capacity of 560,000 metric tons.
Australia’s LNG plants during July shipped 85 cargoes with a combined volume 5.8 million tons, versus 102 cargoes with volumes of 7 million tons in the same month a year earlier, EnergyQuest noted. The country’s west coast plants, including Gorgon, exported 61 cargoes in July with total volumes estimated at 4.2 million tons, versus 77 and volumes of 5.3 million metric tons a year earlier.
To meet contractual commitments, Chevron and Gorgon partner Royal Dutch Shell plc are said to have bought spot cargoes from other Australian LNG plants. Chevron reportedly bought a spot cargo from the Ichthys LNG plant in northern Australia that was loaded in late July, EnergyQuest said. In addition, the consultancy said Chevron bought additional spot cargoes and secured vessels to transport other cargoes.
Shell, which owns a 25% stake in Gorgon, reportedly bought a cargo for late July delivery to replace supply, the consultancy said. Purchasing alternative cargoes ended earlier this month, it said.
The other partners in Gorgon are ExxonMobil (25%), Osaka Gas Co. Ltd., (1.3%), Tokyo Gas Co. Ltd. (1%) and JERA Co. Inc. (0.4%).
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