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Chevron Awards $52.8M Pipe Contract

Wednesday, May 25, 2011

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Chevron Corp. has awarded a major pipe spool manufacturing and coating contract to AusGroup for the Gorgon liquefied natural gas (LNG) project in Western Australia—Chevron’s biggest project ever.

The 18-month contract involves receiving material, fabrication, storage, coating and testing of 8,200 pipe spools of various diameters, weighing approximately 7,500 tons.


 Images: Chevron

LNG ships look back to Barrow Island, 43.5 miles from the Gorgon gas fields.

The value of the contract is estimated at $50 million (Australian), or about $52.8 million US.

Work is scheduled to begin in the second half of 2011.

Singapore-listed AusGroup will execute the deal through its subsidiary AGC Industries Pty Ltd.

‘A Project without Equal’

Chevron calls the $37 billion Gorgon venture “unprecedented” and “a project without equal.”

The massive gas fields contain an estimated 40 trillion cubic feet of natural gas—enough energy, Chevron says, to power a city of 1 million people for 800 years.

The natural-gas venture includes development of the Greater Gorgon gas fields, subsea gas-gathering infrastructure, and an LNG plant on Barrow Island. The island, 43.5 miles from the gas fields, was declared a Class A nature reserve in 1910. The Gorgon Project will occupy just 741 acres (300 ha), or 1.3 percent, of the island's uncleared land mass, according to Chevron.

An artist’s impression shows manifolds and trees planned for the subsea system.

The company plans to safely inject and permanently store about 2 trillion cubic feet of CO2 more than 8,200 feet (2,500 m) beneath Barrow's surface — four times more CO2 than any previous project, according to Chevron. The facility is expected to produce approximately 15 million tons of LNG per year, with the first gas production expected in 2014.

The subsea infrastructure will run as deep as 4,265 feet (1,300 m) and will be designed with larger-diameter, thicker-walled pipelines engineered for higher pressures and corrosive fluids to withstand the environment for the next 50 to 60 years, Chevron says. Between 20 and 30 producing wells will be drilled over 30 years.

One major engineering hurdle was the need for the pipeline to traverse the continental shelf en route to Barrow, crossing an underwater escarpment 328 to 656 feet (100 to 200 m) high with slopes of up to 70 degrees.

Fly-through animation provides an overview of the project.

A Boon to Developing Economies

Chevron holds a 47% interest in the project and acts as the operator. The project also includes the Australian subsidiaries of Royal Dutch Shell plc and Exxon Mobil Corp., each of which holds a 25% stake. Osaka Gas, Tokyo Gas and Chubu Electric Power control the other 3%.

“With the industry outlook remaining attractive for LNG over the next few years, we believe that the Gorgon project will be successful in serving the Asia-Pacific region,” Zacks Equity Research reported. 

“The venture will also lend a strong strategic position to Chevron and its associated partners in the quickly developing economies of China and South East Asian countries.”

Union Concerns

The new pipe contract did little to placate the Australian Manufacturing Workers Union, which has been calling for more locally produced steel in the massive Gorgon project. The union called the Chevron contract a “drop in the ocean” compared to the 250,000-plus tons of steel fabricated overseas for the project.

The union says the local fabrication industry has the capacity to manufacture more than 250,000 tons of steel per year.

San Ramon, CA-based Chevron is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals and other energy-related businesses.


Tagged categories: Contract awards; Oil and Gas; Pipeline; Pipelines

Comment from Tom Schwerdt, (5/25/2011, 1:14 PM)

I wonder what coating systems and other corrosion protection are planned for this project.

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