How Chevron Will Benefit from Its Gorgon Project



Updates from Chevron

Chevron (CVX) has started LNG (liquefied natural gas) production from its Gorgon project. Gorgon, a $54 billion subsea gas project, has the daily capacity to produce 2.6 bcf (or billion cubic feet) of natural gas and 20,000 barrels of condensate. The project’s production is likely to add significantly to Chevron’s current natural gas production capacity. In 2015, Chevron produced an average 5.2 bcf per day of natural gas and 1.7 million barrels per day of liquids.

The project is estimated to have more than 40 years of economic life. Per Chevron, around 85% of the equity LNG offtake from the project is covered by long-term contracts.

Article continues below advertisement

The project, located on the Barrow Islands off of Western Australia, includes a three-train 15.6-million-metric-ton-per year LNG facility, a carbon dioxide injection facility, and a domestic gas plant. Train one of the project has started production, and trains two and three are likely to start production at approximately six-month intervals. All 51 modules required for the three trains have been delivered to the site.

Chevron has a 47.3% interest in the project, followed by Exxon Mobil (XOM) and Royal Dutch Shell (RDS.A), which both hold 25%. The remaining stake is held by Tokyo Gas, Osaka Ga, and Chubu Electric Power. For global stock exposure, you could consider the Vanguard Total World Stock ETF (VT). The ETF has Exxon Mobil (XOM) and BP (BP) in its portfolio.


More From Market Realist