With oil price point not on the gentle ramp-up hoped for and recent Tengiz FID colliding, cash flow remains heavily pressured. We say 36 billion investment at Tengiz. WoodMac says 40 billion. If Gorgon is an indicator of trends in MCP actual vs projected, 50 billion may be closer to the mark. The decision has been made. If the oil price evironment stays low and our cash flow worsens, another knock on our bond rating seems likely. Asset sales underway may help is these deals can be booked this year. What do others think? Is it likely that our credit rating goes lower this year? have conditions worsened enough to warrant that?
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A discussion regarding Tengiz is kind of lost under the title of this post. But since it's here, just a point or two of clarification.
Actually, TCO (Tengizchevroil) DOES have many years of experience with ultra-high pressure/high concentration acid gas injection in the Tengiz Field. The problem with FGP expansion is the geniuses in the Project Engineering house in UK, couldn't just take a Best Practice and repeat it. Hence, instead of a integral multi-stage turbine driven compressor, Project committed to an double unit electric-driven configuration .... which gives it the SN#0001 status. All a rouse for centralized power and supposed online reliability. Time will tell on how many one-of-a-kind electric motors get fried on this wisdom. Fortunately, the big issues on mechanic end should carry through and hopefully control logic between machines sorted before actual acid gas is used.
What is more troubling is the totally absurd design for the high pressure injection lines! Huge amounts of money spent with universities in UK on an expansion joint design that is going to be a nightmare to construct and impossible to reliably protect from external corrosion.
Chevron's engineering problem is not that it doesn't have adequate expertise, its that it doesn't use that expertise to drive the engineering houses to common sense solutions. I can state with certainty, that the main mechanical engineer on FGP re-injection compressors isn't even a CVX employee! Consequently, it was easy for EH to sneek a "stiffy" in and claim its all about safety when its really all about them making money. NO doubt somebody high up in FLUOR got a full ride scholarship for his kids.
But hey...that's all PRC prowess and a reason that organization needs a swift and near-complete decimation in my opinion. Blame JW for not doing that because it's PRC's approach to Project Management that has caused the lying share of the FU's in the big LNG Projects and other MCPs.
Agree on credit rating. The big problem on Tenghiz is the contract expires in 2033. WIth a 2022 startup, not much time to get return. Delays or cost overruns make return more problematic. Also chevron has very little operating experience with high pressure acid gas injection. The design is serial number 1 and at the extreme edge of the operating envelope and very high risk. Look how Chevron lack of LNG experience worked. Chevron process engineering and process safety skills are poor, which explains why LNG startups have been a mess.