Massive LNG Projects in Australia Reach Significant Milestones

Researched by Industrial Info Resources Australia (Perth, Australia)--Northwest Australia's Ichthys and Gorgon liquefied natural gas (LNG) projects each have reached construction phase milestones, while the first of three LNG projects on the eastern coast of Curtis Island is close to start-up.

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The first large, pre-fabricated module has arrived at the Blaydin Point site in Darwin for INPEX Corporation's (TYO:1605) (Tokyo, Japan) $4.4 billion Ichthys LNG production plant. Construction at the onshore site has ramped up since the Northern Territory's dry season began; the wet season usually transitions to dry in May, but ended somewhat late this year.

Development momentum for both offshore and onshore work is going strong. The first of about 200 modules arrived at the site on June 29. More than 60 shipments will continue for about 18 months. Each pre-fabricated module will be shipped and offloaded at the Ichthys marine offloading facility (MOF), most of which will weigh an average of 2,500 metric tons, with some up to as much as 7,000 metric tons.

Ichthys LNG Project Managing Director Louis Bon said modularization of the plant is the best way to ensure that the project is delivered on budget and on schedule.

"The Ichthys LNG Project's onshore facilities were designed so that some elements would be modularized while others could be stick-built on site in Darwin," he said.

Meanwhile, the final large, pre-fabricated module needed for construction of the Gorgon LNG production plant's Train 1 arrived at the site. The $20 billion project is operated by an Australian subsidiary of Chevron (NYSE:CVX) (San Ramon, California), in a joint venture with the Australian subsidiaries of Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas), Royal Dutch Shell (NYSE:RDS.A) (The Hague, Netherlands), Osaka Gas (Osaka, Japan), Tokyo Gas (Tokyo) and Chubu Electric Power (Nagoya, Japan).

The Gorgon project requires 21 pre-fabricated modules for each LNG train. Chevron and its joint venture partners are celebrating the receipt of the last module required for construction of the first natural gas liquefaction train.

The module weighed in at 6,300 metric tons. The plant will begin big, with three LNG trains becoming operational simultaneously in 2015. This scenario in a foundation project is unusual, as most LNG production plant projects have been developed in stages. Generally, a period of at least six months--sometimes a number of years--between each train start-up, have ensued for revenue to start coming in, so that the next stage of development can be funded by the last.

Finally, Curtis Island is the site of three LNG production plants under construction side-by-side. The BG Group-operated Queensland Curtis LNG (QCLNG) project will be exporting its first cargo of LNG in a matter of months, or even weeks.

The three LNG projects on Curtis Island, offshore Gladstone, Queensland, are all modularized plants under construction, with the QCLNG project in final commissioning, with much of the upstream component and the main export pipeline and laterals now complete.

The Australia Pacific LNG (APLNG) project, jointly operated by ConocoPhillips (NYSE:COP) (Houston, Texas) for downstream works, and Origin Energy Limited (ASX:ORG) (Sydney, New South Wales) for upstream works, will be shipping its first LNG early in the second half of 2015. The Gladstone LNG (GLNG) project, operated by Santos Limited (ASX:STO) (Adelaide, Australia), will be the last of the three to go through the commissioning phase and will see its first LNG shipments late in the second half of 2015.

Across Australia, there are seven large-scale projects under development, including the Chevron-operated Wheatstone LNG project and the offshore-only Prelude Floating LNG project, which is operated by Shell.

The next five years will see much electrical, mechanical and instrumentation work and a focus on LNG project commissioning. The introduction over the next decade of a great deal more maintenance activity throughout Australia in the oil and gas industry as a result of these mega-LNG plants in operation will be substantial.

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