Flagship Wheatstone LNG project in Australia started

Published: Oct. 9, 2017 at 8:47 AM

Daniel J. Graeber

Oct. 9 (UPI) -- The first cargo of liquefied natural gas from the flagship Wheatstone project in Australia is imminent now that production started, operators said.

At its peak, the facility will supply nearly 9 million tons of super-cooled gas every year to the emerging and energy-hungry economies of Asia. The facility is located in the state of Western Australia about 7 miles away from the Wheatstone and Iago natural gas fields.

Chevron, the majority stakeholder and operator of the fields, said Wheatstone started producing LNG from the first liquefaction unit, or train, on Monday and the first shipment was expected in the next few weeks. The second train should start service in six to eight months.

"Wheatstone adds to our legacy gas position in Australia that will be a significant cash generator for decades to come," Chevron Chairman and CEO John Watson said in a statement.

The Wheatstone consortium includes the Kuwait Foreign Petroleum Exploration Co., Australian energy company Woodside Petroleum. Drawing on a global portfolio, Woodside said it executed sales and purchase agreements for more than a dozen cargoes of LNG for delivery between 2017 and 2019.

The start-up is significant for both Chevron and Woodside. Chevron has been on a cost-cutting spree, most recently selling off holdings in South Africa and in the U.S. waters of the Gulf of Mexico. In a ranking by S&P Global Platts of top financial performers, Chevron was ranked 121, down 104 spots from last year. Woodside last year put a hold on the development of its Browse LNG project because of market conditions, even after it completed front-end engineering and design work.

"Wheatstone is a world-class asset and the safe start-up of the facility was one of our priorities for 2017, supporting our near-term growth strategy," Woodside CEO Peter Coleman said in a statement.

Chevron brought its Gorgon LNG facility in Australia to full capacity in March.

In a preview of its World Energy Outlook, due out in November, the International Energy Agency said the natural gas market is in flux as it adjusts to the shale momentum in the United States and gains in LNG, both of which could bring a sea change to natural gas markets.

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