This story was originally published in The West Australian on 5 February 2018 with the headline "$32m a day from Chevron LNG." © Peter Milne.
The Gorgon and Wheatstone LNG projects are now enjoying cash margins of more than $US30 a barrel at a $US50 price, Chevron says, and production from the $111 billion mega-projects is expected to increase this year.
New Chevron chief executive Mike Wirth told Wall Street analysts on Friday night that the US major’s two Australian LNG projects were “becoming strong cash generators with cash margins of more than $US30 per barrel at a $US50 Brent price.”
Last month, Gorgon produced an average of 459,000 barrels of oil equivalent a day and Wheatstone achieved 86,000 boe a day.
Brent crude is currently fetching about $US68 a barrel. The margin achieved at $US50 indicates the two LNG projects could be producing more than $US26 million ($32.8 million) of cash a day if the price received for the LNG under long-term contracts and on the spot market moved up in line with the oil price.
Mr Wirth said Gorgon’s three trains and the first Wheatstone train were running well.
He said LNG in Australia, where Chevron also owns 16.7 per cent of the North West Shelf project, and unconventional production in North America would be the two principal sources of production growth for the company this year.
Gorgon has had numerous shutdowns since the $US54 billion project first shipped LNG in March 2016.
Mr Wirth said planned shutdowns on Gorgon’s trains one and three had been completed last quarter to improve reliability and production. It is understood that one issue the shutdowns addressed was overheating of the trains because of poor air circulation.
Production from Gorgon’s three trains was 24 per cent higher than the average over the last quarter of 2017.
Mr Wirth said Gorgon, where the third and final train first produced LNG in late March, shipped 170 LNG cargoes in 2017.
Gorgon has a design capacity of 15.6 million tonnes a year of LNG. If the average size of the 170 cargoes is similar to Chevron’s fleet, about 155,000 cubic meters, Gorgon produced about 12 million tonnes of LNG last year. There is further production upside due from the $US34 billion Wheatstone project with the second train with a 4.45 million tonnes a year capacity on schedule to start in the second quarter. The 200 terajoules-a day domestic gas plant is expected to start in the third quarter.