Bechtel says three more Curtis Island LNG trains to complete this year
The US engineering firm building the LNG plants at Gladstone has declared that it expects to complete three more LNG trains at the sites by the end of the year, quadrupling Queensland’s LNG production and giving birth to a new industry for the state.
Privately owned Bechtel confirmed it should complete construction of the first production units at Santos’ $US18.5 billion ($24.2 billion) GLNG project and at Origin Energy’s $24.7 billion Australia Pacific LNG venture, as well as the second train of the BG Group project, which already has one train in operation.
The timing given by Bechtel appears to confirm the schedules signalled by the three individual ventures. Both GLNG and APLNG have signalled a likely start-up of their first production in the September quarter.
The construction of six LNG production units, known as trains, for three LNG projects simultaneously and side by side represented a first for the global industry. But while the work created thousands of construction jobs in Gladstone and at coal seam gas production fields in the Surat Basin, it also pushed up labour and building costs, with all three projects running beyond their original budgets.
The plants are the world’s first to produce LNG for export using gas extracted from coal seams.
The higher-than-expected costs to bring the projects into production have exacerbated worries about the impact the rout in crude oil prices will have on the profitability of the projects, given the prices for their LNG sales contracts are directly tied to oil prices.
The cost pressures make a smooth start-up of the Queensland projects even more important, to avoid delays in the cash flows that they will produce and any penalties for late deliveries to customers, analysts have said.
Consultancy Wood Mackenzie said last month that the start-up of the Queensland coal seam gas-based projects could well prove to be more successful than the start-up of conventional LNG projects such as Chevron’s $US54 billion Gorgon venture in Western Australia, which is running more than a year behind schedule.
Bechtel construction teams at GLNG and APLNG recently reached the milestone of introducing gas into the LNG plants, and started to generate their own power as part of the commissioning process for the first production trains at the respective sites.
“The projects will begin producing LNG in rapid succession over the second half of 2015,” Bechtel’s global LNG general manager Alasdair Cathcart said.
The second production trains at GLNG and APLNG are expected to begin production in early 2016.
LNG from the three projects will be sent to China, Japan, South Korea, Malaysia and elsewhere in Asia.
Once all six trains are operational, the three projects on Curtis Island will produce about 25 million tonnes of LNG, enough to power a city the size of Tokyo with 13 million people.