The gift of Gorgon

The low rumbling off the Northwest coast of Australia for the past week built to a roar this morning when Chevron said it was moving ahead with the massive Gorgon liquefied natural gas project.
The announcement has been widely expected, particularly since China signed on the dotted line for much of the gas output (3.25 metric tons) last month. But Chevron formally gave the go-ahead and unleashed the beast.
The first phase of the project is estimated to cost about $37 billion (although there’s some conflict over the true value), involving 3 LNG trains, each capable of producing 5 million metric tons of gas per year. First gas is expected in 2014.
Chevron has a 50 percent stake in Gorgon, while Shell and Exxon Mobil each have a 25 percent stake, so there’s likely to be some Houston-based work related to the project. And Houston’s KBR has a lead role in the construction of the project.
There are a few other good signs brewing for oil patch work. Pritchard Capital (and others) expect Petrobas to announce plans for dozens of new floating drilling and production facilities shortly, which could mean a nice boost in work for National Oilwell Varco and others.
And the outlook for drilling rig activity seems slightly positive, notes the people at Pickering Tudor, since oil prices are at least healthy, well costs are down 25 to 50 percent depending on the region and, despite the lousy prompt prices, natural gas futures are looking better many months out.