Chevron Corporation has started production of natural gas in Western Australia at its Wheatstone project. The first cargo is expected to leave the harbor in the next couple of weeks. In the Wheatstone project, the chief operator is Chevron as it owns a 64.14% stake. Other companies which own a stake in the project include Kyushu Electric Power Company, PE Wheatstone, Woodside petroleum Limited and Kuwait Foreign Petroleum Exploration Company. The amount of gas deposits at the Wheatstone field is estimated to be more than 4.5 trillion cubic feet.
There are two liquefaction trains at the Wheatstone project and each has an annual LNG shipment capacity of 8.9 million metric tons. The first liquefaction train has begun production while another one is slated to start operations in the next half a year. With the Wheatstone project Chevron as well as its partners now has an opportunity of serving the high-growth economies in Asia such as India and China.
In Australia Chevron also has another big LNG project known as Gorgon which began operations in 2016. The Gorgon project’s shipment capacity is 15.5 metric tons a year. With these mega projects having begun production, the oil giant expects its free cash flow to improve. The projects are also expected to boost the value of shareholders and drive long-term growth in the next couple of years. Chevron intends to become a major supplier of LNG by 2020.
Exports from the Wheatstone project are expected to put a damper on the increasing spot LNG prices.
“[Wheatstone] comes at just the right time ahead of winter… This will sow the seeds for strong production through winter 2017-18, pushing the market into increasing over-capacity as we move into the summer of 2018,” said Nicholas Browne, an analyst at hWood Mackenzie.
Largest LNG exporter
With numerous LNG projects being undertaken down under, Qatar will soon be overtaken by Australia as the largest seller of LNG in the world. Four years ago Qatar was displaced by Australia as the largest supplier of LNG to Japan while two year ago Australia became the second largest exporter of gas.
Australia is expected to become the largest exporter of LNG in 2020. By mid-2019, the annual LNG export levels in Australia are expected to reach 74 million tons. Besides Chevron’s Wheatstone project, other mega projects that are expected to drive production up include Ichthys LNG and RDS A Prelude floating LNG facility.