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Chevron to Halt Gorgon Project Trains 1 & 3 for Fault Checking

Chevron Corporation CVX has decided to stall Train 1 at the Gorgon LNG project offshore Western Australia for inspecting the damage. The stoppage is expected to be effective early October soon after the Train 2 re-enters service somewhere around early September. Train 2 was halted in May after welding cracks were discovered. If issues are found while inspecting the first train, it could be offline for a period of 45-90 days.

A temporary suspension of the Gorgon Train 3 plant is also expected to take place in early 2021, based on the results of repairs made to the other trains. All three trains were built at the same fabrication yard in South Korea with the first two coming online in 2016 and the Train 3 commencing operations in 2017.

The Department of Mines, Industry Regulation and Safety, Western Australia’s industrial regulator, has been coordinating with Chevron in its maintenance work and it directed the company on Aug 7 to examine the propane heat exchangers in Trains 1 and 3 at the three-train LNG plant by Aug 21 after welding glitches were detected on propane kettles in Train 2 at the time of a planned checking.

While Chevron is the chief operator of Gorgon LNG project holding 47.3% stake, Exxon Mobil Corporation XOM and Royal Dutch Shell plc RDS.A own 25% interest each. The remainder is held by Osaka Gas, Tokyo Gas and Chubu Electric Power.

Gorgon LNG project is the largest single resource endeavor in Australia, dealing with the delivery of natural gas to international and domestic customers. Valued at $69-billion, it is one of the costliest energy projects, employing more than 10,000 people to construct the processing facility at Barrow Island. The Gorgon LNG project boasts a shipment capacity worth 15.6 million metric tons per year.

Brief on the Company

Chevron is one of the largest publicly-traded oil and gas companies in the world with operations spread to almost every corner of the globe. A component of the Dow Jones Industrial Average, this energy player is a fully-integrated company, participating in every energy-related process, ranging from oil production to refining and marketing. 

Zacks Rank & Key Picks

Chevron currently has a Zacks Rank #3 (Hold). A better-ranked player in the energy space is Murphy USA Inc. MUSA, presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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