The Gorgon LNG project has confirmed reports of a cost blow-out, with the project now expected to cost $52 billion. However, they have maintained that the economics of the project remain attractive and construction is progressing well.
The Gorgon three-train LNG foundation project on Barrow Island has been under construction for three years and is approximately 55 percent complete.
Tthe total cost estimate for the foundation project has increased from AU$43 billion to AU$52 billion. Plant start-up is planned for late-2014, leading to the first LNG cargo in the first quarter 2015. The factors contributing to the increased costs and schedule impacts include labour costs and productivity associated with Barrow Island site infrastructure, logistics challenges, and weather delays.
“Gorgon project economics are attractive,” said Vice Chairman George Kirkland. “While investment requirements have grown, oil prices, which directly impact the overall revenue stream, have increased by approximately 80% over the same time period. In addition, the LNG nameplate capacity has increased by four percent, to 15.6 million tons per year.”
Kirkland added, “Our exploration program continues to discover additional gas resources which could support future expansions of our Australian LNG developments.”
The Materials Offloading Facility is fully operational, the first two process modules and more than 30 per cent of the pre-assembled rack (PAR) modules are on site.
The roofs are raised on both the LNG tanks, and the first gas turbine generator module is due on site in December.
The Upstream scope is progressing as planned with fabrication of all subsea structures well underway, all Gorgon wells drilled, 10 Jansz-Io wells spudded (with two drilled and completed) and 50% of all pipeline activities are complete.