Beach Energy Ltd. said on Thursday it could not meet the 2023 target for first production from a gas project in Western Australia due to a labor shortage.
The Waitsia Stage 2 project had already been threatened when construction contractor Clough Ltd. went into voluntary administration following the failed sale of his business, as announced by Clough on 5 December.
But Beach said on February 6 that it has reached an agreement with Webuild SPA, which eventually acquired Clough, for the completion of the Perth Basin project.
However, Beach announced on Thursday: “Since then, the tight labor market in Western Australia in particular has affected construction progress at the Waitsia gas plant to create a number of d ‘uncertainty in results which means that Beach no longer considers it prudent or appropriate to maintain its previous target schedule and capital budgets’.
Beach had planned to commission Waitsia Stage 2 this year, which is targeting gross production of up to 1.5 million metric tons of liquefied natural gas (LNG) per year by 2028. The project includes the drilling up to six wells and building a gas processing facility, according to Beach’s final investment decision announced on December 23, 2020.
The pipeline to transport gas from the second Waitsia plant is now operational following the construction of the first phase of Waitsia. The gas is then to be transferred to the Australian Gas Infrastructure Group’s Dampier to Bunbury Natural Gas Pipeline, with which Beach has already signed an agreement, before delivery to the North West Shelf, where the gas would be exported, according to in december 23 launch.
Beach also said in that announcement that it has signed a pact with the state government to export up to 7.5 million metric tons of LNG through 2028.
It revised its capital expenditure for the project to $400-450 million in net costs for Beach alone, as outlined in the February 6 announcement of the deal with Webuild.
On September 27, 2021, Beach said it had signed heads of agreement with BP Singapore Pte. Ltd. for the BP subsidiary to buy all 3.75 million metric tons of projected Beach LNG volumes from the project.
Thursday’s update said: “The cost and schedule review by the operator of Waitsia Joint Venture and Webuild is ongoing to identify and implement opportunities to mitigate project impacts and limit the range of uncertainty .Beach will provide an update when this review is complete.
“The Waitsia project continues to be strongly value-adding and a key element in the Beach’s future growth.”
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