Inpex loses crucial Ichthys contractor

This story was originally published in The West Australian on 27 January, 2017 with the headline "Ichthys on tight time line for first gas." © Peter Milne.

The termination of a key contract at the Ichthys LNG project — which draws its gas from WA’s North West — has added to problems which are threatening to derail plans for first production in September.

The contractor building the power station in Darwin, a joint venture between CIMIC-owned UGL and American company CH2M Hill, pulled its workers off the site on Wednesday.

The decision could trigger a disproportionate delay, West-Business understands, because the last 10 per cent of the power station work is particularly complex and needs to be operating to allow commissioning of the overall onshore plant.

JKC Australia LNG, a joint venture between Japanese companies JGC and Chiyoda and US giant KBR, is building the onshore LNG plant in Darwin for project operator Inpex.

JKC project director John Bramley told WestBusiness the company was disappointed the CH2M Hill-UGL joint venture provided a “notice of termination”. “As a result, construction work on the combined cycle power plant has temporarily ceased, however, other activity continues,” he said.

Mr Bramley said the power station was 89 per cent complete.

Faulty pipework insulation on the overseas-built plant modules is understood to have resulted in waterlogged insulation and peeling paint, adding to the workload of the 8000 workers in Darwin.

JKC confirmed the extra work had started, saying the balance of the work would likely take place after the current wet season.

“This work will be undertaken in parallel with construction and commissioning activities and is not expected to impact on overall project delivery,” Mr Bramley said.

Problems at the onshore plant are heaping pressure on Inpex as it grapples with a massive offshore installation program.

The major offshore components of the Ichthys project are a central processing facility that houses 200 workers, a floating production storage and offloading facility to store the condensate production, and an almost 900km pipeline to transport gas to the LNG plant near Darwin.

The pipeline has been installed on the seabed but the CPF and the FPSO are still in shipyards in Korea.

It is understood the CPF will leave Korea in March and arrive at the Ichthys field in April. The FPSO departure time is yet to be determined.

A project schedule contained in the Ichthys project offshore facility environment plan of December 22, lodged with Australia’s offshore oil and gas regulator, shows an indicative timing from the arrival of the first vessel on site, either the CFP or the FPSO, to the first gas arriving at Darwin of six months.

The Inpex plan states that the arrival of the first ship is scheduled for late in this quarter, which would see the first gas reaching Darwin late in the third quarter. The plan states that timing is subject to weather delays and assumes the other ship arrives a week later.

To hit its production start target, Inpex is relying on both ships arriving on site by mid-March, no weather delays and the plant producing LNG a few weeks after receiving the first gas from offshore.

A spokesman for Inpex said the project was 90 per cent complete in September and the target to start production remained the third quarter of this year.