Huge LNG cost blowout:
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| Chevron’s general manager for operations in Australia, Brian Smith did not wish to speculate on the extent of the cost increase. Photo: Claire Martin |
WOODSIDE, JAMES WILL NOT BRING YOU HOME.
Photo Damian Kelly
ACTION OF THE DAY
A MAJOR national bank has been forced to remove more than 100 misleading out of order signs from its ATMs after being targeted by anti-coal activists.
A MAJOR national bank has been forced to remove more than 100 misleading out of order signs from its ATMs after being targeted by anti-coal activists.
A score of ANZ Banking Group machines sprawled across six capital cities were plastered with "out of order" signs on Sunday after campaigners launched their latest bid to draw attention to the bank's funding of the coal industry.
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BARROW - THE ISLAND OF DESPAIR.
ReplyDeleteNOW THEY WISH THEY HAD LISTENED TO THE GREENIES AND HIPPIES
Chevron’s island of despair
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Thursday, 15 November 2012
Andy Graham
WITH reports of a looming $20 billion blowout on the Gorgon LNG project, Chevron executives could be forgiven for quietly wishing they had listened to environmental regulators and just built the project on the mainland.
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WOODSIDE HESDING FOR DISASTER AT JPP
Woodside Petroleum says it intends to stick with James Price Point as the site for its $40 billion Browse LNG development, despite talk that its partners favour floating LNG, the Australian Financial Review reports.
The paper said Shell was “understood” to favour floating LNG as the most profitable option, but operator Woodside said yesterday it was committed to James Price Point.
“We chose an onshore facility …and now we have a retention lease commitment which requires us to work our way towards a commercialisation phase based on an onshore facility and that is precisely what we are doing,” Woodside chief financial officer Lawrie Tremaine reportedly told a conference.
LOL...OF COURSE HE COULD BE JUST DOING BARNETT A FAVOUR AND TAKING A BIT OF THE HEAT OFF HIM - ELECTIONS DUE -
FLNG - THE SMART CHOICE FOR THOSE IN THE KNOW.
ReplyDeleteA REPORT has highlighted the strategic advantages of floating LNG and predicted a $47 billion FLNG spend globally by 2019.
THE WORRIES OF BUILDING ONSHORE PLANTS
COST BLOWOUTS
TERRORISM
NIMBY - ISM
“The use of offshore regasification facilities placed in relative proximity to existing gas markets, connected to shore by pipeline, is one method to alleviate such concerns.”
Douglas-Westwood forecasts FLNG expenditure is set to total $47.4 billion from 2013-2019, with more than $28 billion spent on FLNG liquefaction and $19.1 billion on import terminals.
“Australasia will account for 22 per cent of the market, largely due to a number of liquefaction projects,” Dormer said.
“Latin America will represent 17 per cent of global FLNG expenditure, with projects involving both offshore liquefaction and regasification vessels.”
Douglas-Westwood director Steve Robertson said the emergence of vast offshore conventional gas resources offered a more predictable long-term source of supply than onshore unconventional gas.
“In excess of 100 trillion cubic feet has been discovered in Mozambique and Tanzania alone – equivalent volumes to the world’s current annual natural gas consumption,” he said.
“Whilst the conventional reserves in place are vast, development will be technically complex as the finds are in water depths ranging from 800m to over 2000m.
“However, with the progression of FLNG projects in Australasia, floating liquefaction is becoming an increasingly viable option for the production and export of natural gas in east Africa.
“It is also important to note that theoretically, FLNG would be the MOST ECONOMICAL STRATEGY with a LOWER COST PER TONNE PER ANNUM.”
MYSTERY SOLVED
ReplyDeletehttp://www.guardian.co.uk/environment/2012/nov/11/poles-scientists-antarctic-sea-ice
The mystery of the expansion of sea ice around Antarctica, at the same time as global warming is melting swaths of Arctic sea ice, has been solved using data from US military satellites.
Two decades of measurements show that changing wind patterns around Antarctica have caused a small increase in sea ice, the result of cold winds off the continent blowing ice away from the coastline.
"Until now these changes in ice drift were only speculated upon using computer models," said Paul Holland at the British Antarctic Survey. "Our study of direct satellite observations shows the complexity of climate change.
"The Arctic is losing sea ice five times faster than the Antarctic is gaining it, so, on average, the Earth is losing sea ice very quickly. There is no inconsistency between our results and global warming."
The extent of sea ice is of global importance because the bright ice reflects sunlight far more than the ocean that melting uncovers, meaning temperature rises still further.
This summer saw a record low in Arctic sea ice since satellite measurements began 30 years ago. Holland said the changing pattern of sea ice at both poles would also affect global ocean circulation, with unknown effects. He noted that while Antarctic sea ice was growing, the Antarctic ice cap – the glacier and snow pack on the continent – was losing mass, with the fresh water flowing into the ocean.
The research on Antarctic sea ice, published in Nature Geoscience, revealed large regional variations. In places where warm winds blowing from the tropics towards Antarctica had become stronger, sea ice was being lost rapidly. "In some areas, such as the Bellingshausen Sea, the sea ice is being lost as fast as in the Arctic," said Holland.
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SOME ARE LEADING THE WAY
http://news.yahoo.com/u-hesitates-california-pours-billions-green-energy-080205156--sector.html;
California voters last week directed some $2.5 billion to energy conservation programs with the approval of Proposition 39, which closes a corporate tax loophole, allocates about half of the new revenue to environmental goals for five years, and which passed with more than 60 percent of the vote.
In addition, the state this week will begin selling "carbon allowances" as it implements a cap-and-trade program to reduce greenhouse gasses. Revenues from those sales, which could reach $11 billion a year by 2020, will also be used for clean energy development.
The new programs come on top of a solar power subsidy program, now in its fourth year, which has driven a widespread adoption of rooftop solar systems around the state. And an aggressive effort to require electric utilities to use renewable sources for one-third of their output has also given the sector a big financial boost and spurred the construction of several massive solar power plants throughout the state.
"We put our money where our mouths are," said Mary Nichols
Citing unidentified sources which it said have knowledge of Chevron's current cost review, the Financial Review report said the U.S. company will announce a the A$20 billion increase by the end of the year.
ReplyDeleteSince the project was approved in September 2009, Chevron executives have subsequently spoken of challenges faced sourcing skilled labor amid a booming Australian mining and energy sector. The LNG processing plant for Gorgon is being built on the nature reserve of Barrow Island offshore Western Australia under strict environmental management conditions in an area prone to cyclone activity in summer.
A large cost increase could cast a cloud over expansion plans for Gorgon, which also counts Exxon Mobil Corp. and Royal Dutch Shell PLC as major investors and is slated to produce up to 15.6 million metric tons of LNG a year from three production units in its foundation stage.
Chevron wants to start early design work on a fourth LNG processing unit by the end of the year.
Concerns about cost pressures at Gorgon intensified Monday when Exxon said the cost of building a LNG facility in neighboring Papua New Guinea had blown out by A$3.3 billion to US$19 billion amid exchange-rate movements, local landowner disputes and torrential rain.
Two Australian LNG projects involving BG Group PLC and Santos Ltd. have also announced substantial budget overruns this year.
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Nov 15 (LNGJ) - South Korean LNG imports fell more than 9 percent last month to 2.7 million tonnes compared with the same month a year ago. Qatar remained South Korea's largest supplier of LNG in October, delivering just under 600,000 tonnes.
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Europe is also officially in recession.
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Echo's of JPP - The fact that Barrow Island was the cheapest option meant it was the only option for Chevron.
ReplyDeleteA tale of regret.
Chevron’s island of despair
Andy Graham
Thursday, 15 November 2012
WITH reports of a looming $20 billion blowout on the Gorgon LNG project, Chevron executives could be forgiven for quietly wishing they had listened to environmental regulators and just built the project on the mainland.
Western Australia’s Environmental Protection Authority strongly opposed the decision to allow Chevron to build the Gorgon project on Barrow Island, a Class A nature reserve.
Advising against environmental approval of the project in 2003, the EPA said it opposed development on Barrow Island as a “matter of principle … particularly given the very high and unique conservation and environmental values of the island”.
Chevron itself didn’t initially contemplate building an LNG plant on the island.
Its original development plan in the late 1990s for the Gorgon gas fields was to build the LNG plant on the Burrup Peninsula, the site of the mammoth North West Shelf gas plant.
The Asian economic crisis of 1997-99 killed that idea.
When the project was revived a couple of years later, Burrup was out and Barrow Island was in.
Chevron said at the time it had compared Barrow Island to Burrup and other onshore and offshore options using a “suite of technical, commercial, social and environmental constraints and requirements”.
Its conclusion was unequivocal: Barrow Island, it said, was “the only commercially viable location”.
According to Chevron’s calculations, siting the LNG plant on Barrow Island – only 70km from the gas fields – would save between $700 million and $1 billion in pipeline costs compared to onshore sites at Cape Preston and Burrup.
Having seen the project fall over once due to the cost/return equation not adding up, the fact that Barrow Island appeared the cheapest option meant it was always going to be Chevron’s favourite option.
The company said in 2003 that the Barrow Island site would “minimise costs of the initial development, which is critical to making the Gorgon development competitive in international markets”.
The state government, effectively given the choice of Barrow Island or nothing, overlooked the EPA’s misgivings and gave Chevron the go-ahead.
Now, nearly a decade later, the consequences of Chevron’s single-minded pursuit of Barrow Island are contributing in no small part to the ballooning cost of the project.
According to sources quoted in an Australian Financial Review story yesterday, Chevron is set to announce a $20 billion blowout on Gorgon, which would take the project’s cost to $63 billion.
The report said one of the factors contributing to the blowout was the stronger Australian dollar.
The other factor was construction delays on Barrow Island caused by “weather, logistics and labour productivity”.
For labour productivity, read union trouble.
Chevron couldn’t have done much about the weather but some of its biggest problems with logistics and unions stem directly from the decision to build on Barrow Island.
By locating such a massive construction project on an island, Chevron has virtually made itself a hostage to one union, the Maritime Union of Australia.
cont...
ReplyDeleteAs the AFR story notes, all locally sourced equipment bound for Gorgon is dispatched from the Australian Marine Complex (AMC) at Henderson, south of Perth.
The newspaper report says the MUA, led by its “particularly aggressive” local secretary Chris Cain, “has engaged in protracted ‘go slows’ and manufactured safety issues and aggressive wage demands which have consistently caused delays and escalated costs”.
Oh, how Chevron must have longed to give a healthy “up yours” to the MUA and sent some of those Gorgon-bound goods up the Great Northern Highway on a truck or twenty.
Wrapped in plastic
As noted earlier, the EPA had serious misgivings about the logic of building a massive plant at a place as unique and precious as Barrow Island, all to save a billion or so.
But as part of the price of being given the keys to the island, Chevron agreed to environmental conditions that could well be unprecedented in their toughness.
And the company has taken its commitment to keeping the island in its pristine state seriously.
That commitment, however, has contributed to a logistical nightmare.
Before being dispatched from the AMC, plant and equipment is scrupulously washed and cleaned to remove any traces of invasive flora or fauna that might upset Barrow’s delicate balance.
Then everything is totally encased in thick plastic wrap to ensure no nasties hitch a ride on the journey to Gorgon.
And it’s not just the locals being slowed down: companies delivering the massive plant modules from Asia have complained of the headaches caused by the requirement that absolutely nothing is unloaded on the island that isn’t on the specification sheet.
Problems with the offloading facility on the island itself haven’t helped.
One contractor complained to the Australian last year that delays were “being caused by problems with insufficient wharf facilities and staff accommodation, not just the extensive quarantine procedures needed to access the island”.
Around the same time, another newspaper report said Gorgon contractors, including Leighton Holdings subsidiaries Leighton Contractors and Thiess, had filed claims with Chevron for losses of up to $300 million caused by delays onsite.
Through all this, Chevron consistently dismissed talk of project cost and schedule pressures – until July this year, when Chevron upstream vice president George Kirkland admitted the company had been forced to begin a detailed cost and timing review.
A revised project cost from the current figure of $43 billion is expected before the end of the year.
It’s important to note that onshore Australian LNG plants aren’t immune to cost pressures either.
Only yesterday, in the context of a report on a 21% blowout at the PNG LNG project, EnergyNews observed that at a cost of about $3.5 billion per million tonnes of annual capacity, Woodside’s Pluto LNG plant wasn’t great value.
But at $63 billion for a 15MMtpa project, or $4.2 billion/MMtpa, Gorgon is shaping up to make Pluto look like a bargain.
Worth noting those last 3 paragraphs :
DeleteShells first FLNG will cost abot $3 billion per MTPA.
They get cheaper - and bigger as the new technology developes.
A 6 mtpa FLNG COSTING $10 BILLION WOULD PRODUCE AT $1.6 BILLION PER MILLION TONNES PER ANNUM.
OR ALMOST 1/3 rd THE COST OF GORGON
OR LESS THAN 1/2 THE COST OF PLUTO
They could have also mentioned that due to extremely bad planning - (lets get the CEO's in here and all the office people and mad pollies) - Chevron have had to get water in barges from Broome,a round trip of about 2,000 klms.Sand,from south of Port Hedland,that was supposed to be shipped out from the Pilbara,has had to be road trained to Broome,fumigated,sealed in containers,and shipped to Barrow on barges as well.
DeleteAll because no one figured out there would be no available wharf space from any Pilbara ports - for a very long time.
But hey,let's not let the truth get in the way of a load of piss weak exscuses from a mob of over rated dickheads who think they were born with a silver spoon up their ass.
Not to mention the overpaid and over rated morons who think their reputations are immune from all critisism because they play golf here and there and belong to f*cked up Silvertail Country Club.
So f*ck all the dumb ass f*ckers who think the only way to make a quid is by destroying peoples lives and the planet we all live on.
LOL... EVERYTIME THIS HAPPENS MANAGEMENT REFUSES TO ACCEPT ANY BLAME FOR THE STUFF UPS AND IT'S ALL THE FAULT OF THE WORKERS AGAIN.WORLEY PARSONS WAS BLAMING THE COSTS OF DOING BUSINESS IN PERTH THIS WEEK - ENGINEERS GET PAID TOO MUCH - OF COURSE IN THE PERFECT WORLD OF THE OFFICE EVEN CEO'S,ON $10 MILLION A YEAR + PERKS,CANNOT BE TO BLAME FOR ANYTHING - HELL NO....
ReplyDelete“At this week’s Australian Resources Conference in Perth, speaker after speaker highlighted and directly linked many of the cost blowouts and labour productivity issues to the government’s Fair Work laws,” AMMA chief executive Steve Knott said.
Knott said there were more than $500 billion worth of resource projects either approved or proposed in Australia, which was estimated to create 90,000 new jobs by 2016.
“Yet the government continues to ignore employers’ significant concerns about the adverse impact the Fair Work legislation is having on the commercial viability on these projects, in terms of labour productivity and the excessive labour costs being incurred,” he said.
Some of the main issues AMMA addressed in its submission to the senate inquiry included the capacity to make greenfield agreements without exorbitant wage and condition outcomes or unnecessary project delays, and ensuring allowable matters in enterprise agreements pertained to the employment relationship.
AMMA is also pushing for protected industrial action to be taken only as a last resort and for the location and frequency of union workplace visits to be more reasonable.
AND OF COURSE IT'S THE FAULT OF ALL THAT STUPID GREEN TAPE - HELL YES.
Chevron
ReplyDeleteChevron has given early December as the date when it will make an announcement about its review of costs on the Gorgon LNG project, The Australian Financial Review reported.
“The detailed cost and schedule review on the Gorgon project is nearing completion,” a Chevron spokesman reportedly said.
“Chevron is experiencing cost pressures primarily related to foreign exchange effects, weather, logistics and labour costs.”
According to AFR, the spokesman said the company was still confident about the project’s “economics and the value created”.