The Wheatstone Project: An expanding and reliable source of natural gas

Barrow Island
Mines and Petroleum Minister Bill Marmion and Chevron Australia managing director Roy Krzywosinski inspect progress on Barrow Island in August 2013, image courtesy the Government of Western Australia

Australia is the focal point for some of energy behemoth Chevron’s biggest projects globally and none are more influential than the Wheatstone Project in Western Australia’s Pilbara region. Energy Source and Distribution looks at the progression of the $29 billion project, which is set to become one of the most advanced LNG projects in the world.

The Wheatstone Project is one of Australia’s largest resource projects. Located at Ashburton North, 12km west of Onslow, it includes two LNG trains with a combined capacity of 8.9 million tonnes per annum, as well as a domestic gas plant.

In recent months, several major project milestones have been achieved. In August, Thiess began tunnel boring for the micro-tunnel shore crossing, which will connect the offshore processing platform to the onshore facilities at Ashburton North. That same month, a new 1900m runway was completed at Onslow Airport, allowing larger aircraft to bring more people and material resources into the area.

More recently, Chevron Corporation’s Australian subsidiaries signed a binding long-term sales and purchase agreements with Japanese utility Tohoku Electric Power Corporation.

The 20-year deal to buy more LNG from Australia reinforces the country’s position as the biggest LNG supplier to Japan at a time of shifting market dynamics.

It also comes as Japan, the world’s largest buyer of LNG, continues debate around whether to resume nuclear-power production in the wake of the Fukushima disaster.

Chevron announced the partnership on October 1, 2013, saying it would supply the Japanese utility with 0.9 million tonnes of LNG per annum for two decades. The deal means 85 per cent of Chevron’s LNG equity in the venture is now committed to Asian customers on a long-term basis.

As the deal was being negotiated, Asian buyers were not shy in warning they could look to new and cheaper sources of gas supplies, particularly in North America and Africa. Not surprisingly, Chevron Australia managing director Roy Krzywosinski was quick to say the commitment to supply Asia with LNG from Wheatstone on a long-term basis is extremely positive for Australia.

“These agreements, combined with our ongoing exploration success, demonstrate that our Wheatstone and Gorgon projects in Australian are well-placed to meet the growing demand for natural gas in the Asia-Pacific region,” he said.

First production from the project is expected in 2016. According to current estimations, around $200 billion in LNG projects are currently under construction around Australia, with the looming rise in output set to see Australia rival Qatar as the world’s largest LNG producer, as reported by The Australian.

Laying permanent foundations

It has now been two years since the Wheatstone Project first announced a final investment decision and the initial focus on building roads, accommodation for workers and provision of water facilities has paid off. Attention is now turning to laying the first permanent foundations at the LNG plant site.

Site preparation for the LNG plant is progressing, with piling works by Australian contractor Frankipile well underway to install approximately 23,000 piles for the LNG plant foundation. A joint venture between Theiss and EV LNG Australia has commenced works on the two LNG storage tanks and two condensate storage tanks onsite.

In regards to marine scope, offshore dredging works began back in April in order to construct supporting marine infrastructure for the LNG plant, including a Materials Offloading Facility, turning basin and navigation channel. BAM Clough JV also mobilised to site to begin construction of the Product Loading Facility.

Preparations are now underway to install the 225km trunkline, which will connect the offshore processing platform to the onshore facilities at Ashburton North.

The first stages of micro-tunnelling also began in August; a process that will avoid environmentally sensitive areas by tunnelling underground and joining with the offshore trunkline.

Developing infrastructure

The Shire of Ashburton recently completed works on a new 1900m runway, which will allow more workers to be flown in on bigger jets. Chevron Australia funded the airport upgrade to ensure it could accommodate larger aircraft and increased air traffic associated with the Wheatstone Project.

Chevron Australia Wheatstone Project general manager Eric Dunning said the runway completion was an important step for Chevron’s social infrastructure scope of the project.

“Chevron has committed more than $250 million to social infrastructure projects in Onslow, such as upgrading community facilities, education and health services, roads, power and water infrastructure,” he said.

“Work has now begun on building a new airport terminal, which will pave the way for the shire to establish regular passenger flights for the local community.”

New facilities at the popular Four Mile Creek recreational space are also nearing completion, with barbecue and shade areas taking shape.

Contract partners:

Throughout the construction process, Chevron Australia announced it is committed to local supplier opportunities by actively supporting Australian industry participation in Wheatstone.

Infrastructure service provider Zinfra entered into an agreement with Bechtel for the design and construction of a 132kV high-voltage power underground cable system network for the Chevron-operated Wheatstone Project in May, 2013.

The underground cable network for the Wheatstone Project includes a series of plastic conduit pipes in banks six pipes wide and four deep to carry the 132kV power cables throughout the two train LNG plant. Up to 40 new jobs were created onsite at Ashburton North as a result of the contract.

The scope of work under the subcontract presents a number of engineering challenges for Zinfra, including varying soil conditions, harsh climatic conditions and construction of duct banks with up to 24 concrete encased ducts per bank.

The duct banks have a large cross section with steel reinforcing to withstand the weight of heavy machinery and site traffic. The duct banks are waterproofed and each tie bar is insulated with heat shrink caps.

The duct banks will be constructed above ground and installed underground. The bank construction demands complex form work and extra high-voltage cable installation and jointing.

ATCO Structures and Logistics (ATCO) has entered into an agreement with Bechtel to design, manufacture, transport and install 357 modular units for project. The contract, valued at an estimated $100 million, commenced with the design phase in mid April, 2013.

As a result of the agreement, ATCO expects to create 137 new jobs, including 42 manufacturing jobs in Perth and Brisbane and 95 jobs based onsite at Ashburton North.

The new roles created onsite include engineering, plumbing, carpentry, electrical trades, general labouring and administrative positions. The agreement also supports 70 existing manufacturing, in-house subcontractor and support staff positions.

The units supplied will be used to form a variety of office complexes and free standing modular buildings onsite including training centres, IT buildings, guardhouses and medical centres. The units will be built at ATCO’s manufacturing facilities in Brisbane and Perth. The 14,000sq m facility in Perth is the newest addition to ATCO’s construction operations in Australia.

This is ATCO’s fourth major contract win supporting LNG projects in Australia. In 2011 and 2012, ATCO delivered three large workforce housing projects for LNG facilities on Curtis Island, providing more than 6000 beds for workers constructing LNG terminals.

Generating local jobs

Ashburton North is now home to more than 3000 workers, representing 145 contractor and subcontractor companies alike – each committed to delivering their respective work scopes across the project. By the end of 2013, the onsite Wheatstone workforce is expected to increase to more than 4000.

What’s more, a major contract to design, manufacture and install more than 300 modular units has already created more than 100 new jobs.

ATCO Structures and Logistics Australia recently secured the contract, valued at an estimated $100 million, which will require engineering, plumbing, carpentry, electrical trades, general

labouring and administrative positions. The 137 new jobs already created include 42 manufacturing jobs in Perth and Brisbane and an additional 95 jobs based onsite at Ashburton North.

The modular units will become offices, training centres, IT buildings, guardhouses and medical centres.

ATCO Structures and Logistics Australia managing director Adam Beattie said the units would be built at the company’s new manufacturing facilities in Kwinana, Western Australia and in Queensland.

“We are pleased to support local industry and look forward to the opening of our new Kwinana manufacturing facility later this year,” Mr Beattie said.

“While the facility was commissioned prior to the Wheatstone contract, the first units to be produced there will be specifically for Wheatstone and that is significant for the company.”

Former Federal Resources Minister Gary Gray said it was great to see a local company getting significant fabrication contracts in the resources sector.

“There is nothing more important than getting people into work, which is why it is so fantastic when new opportunities like this come along,” Mr Gray said.

Cementing Australia as a reliable supplier of natural gas

Since the project’s inception, Chevron has marketed this major LNG venture as a way to reinforce Australia as an expanding and reliable supplier of clean, natural gas for the 21st century.

After beginning construction in late 2011, Chevron committed more than $10 billion dollars in services and supply contracts to Australian businesses. Often, there has been a further spin-off to the local economy with subcontractors of main contract winners also gaining new supplier opportunities. Australian companies that have won contracts related to the project include air, bridge construction, medical, network and telephony and electrical control and distribution services.

Both Chevron’s Wheatstone and Gorgon projects will provide critical mass in Western Australia and the nation to stimulate research and development in areas such as petroleum production, health and safety, gas processing technologies, CO2 management, sub-sea technology and environmental management. It is this longer-term investment in people and technology, along with the ongoing jobs and billions of dollars that will flow into economy in the next 40 to 50 years that Chevron says are the real benefits of mega projects such as Wheatstone and Gorgon.