Sept 11 The liquefied natural gas market looks
to be tight in the years ahead given a shortage of new projects
lined up, partly due to rising costs as demand for contractors
to do the work has surged, Chevron Corp's vice chairman
said on Wednesday.
Some Australian LNG export capacity already has been
scrapped, while Chevron was forced to add $15 billion to the
price tag for its huge Gorgon LNG project in Western Australia.
"The rising costs of contracting will impact the economics
of projects, and could temper the industry's willingness to
invest," George Kirkland, who runs the U.S. company's oil and
gas production arm, said of the industry in general. "The supply
is there. Really the question then becomes: can we bring it to
With another large Western Australia LNG export project due
to start up for Chevron at Wheatstone in 2016 - less than two
years after Gorgon - and with the most advanced one in Western
Canada at Kitimat, Kirkland said his company felt pleased it
moved fast enough to meet growing Asian demand for natural gas.
The cycle time for LNG plants between front-end engineering
design (FEED) work and first gas shipments could run up to eight
years, Kirkland said in a lunchtime address to investors at the
Barclays CEO Energy-Power conference in New York. Plus, entering
that FEED stage represented a $1 billion commitment, he added.
Kirkland saw Canada as a better opportunity for LNG plants
than Chevron's home country, simply because it had a long and
unbroken tradition of exporting energy.
He was speaking right before the U.S. government gave its
approval for exports from a proposed fourth LNG export facility
at Cove Point, Maryland, on Wednesday.
As for meeting Asian demand with gas closer to home, he cast
doubt on the most ambitious assumptions about shale in China.
While Chevron was encouraged by early assessments of its own
interests there, Kirkland said on a recent trip to China he had
heard talk generally of a "considerable reduction in the
potential" in the country overall, following early estimates
that it had more shale gas than anywhere else in the world.
"Time will truly tell, as it always tells in our business,"
Kirkland said. "I always get reminded that we have views, and
those views get turned around later, both up and down."