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Chevron Starts 2nd Stage Drilling in Australia Gorgon Project

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Chevron Corporation (CVX - Free Report) recently commenced expansion work of the Gorgon LNG project in Western Australia through second stage drilling operations. The campaign is expected to feed the three production trains of the multibillion dollar Gorgon project.

The latest development is expected to enhance Chevron’s existing subsea gas-gathering network through the addition of seven new wells in the Gorgon field and four wells in the Jansz-Io field. The depth of the wells is anticipated to be in the range of 220-1320 meters. While a mobile offshore drilling unit, DD1, is likely to be used at the Gorgon field for drilling the wells, the Jansz-Io field is expected to get a specialised drill ship, KG-2.

The expansion includes system upgrades at the 15.6 million tons per annum LNG facility, located on the Barrow Island. Moreover, the installation of 11 vertical subsea production trees and production pipelines of 46kilometers constitutes part of the plan.  Additionally, 2840 tons of subsea structures will be added during the campaign.

The expansion will enable Chevron to provide customers with cleaner energy sources over a long term. As demand for LNG is expected to surge in the coming years, especially in the Asia-Pacific region, Chevron’s ability to supply LNG from Australia can be viewed as a long-term profit source.

Chevron is the operator of the Gorgon Project with 47.3% stake. It is partnered by Exxon Mobil Corporation (XOM - Free Report) , Royal Dutch Shell plc (RDS.A - Free Report) , Japan's Osaka Gas, Tokyo Gas and JERA with respective interests of 25%, 25%, 1.25%, 1% and 0.417%.

Price Performance

San Ramon, CA-based Chevron has gained 9.1% year to date compared with 3.9% collective growth of its industry.

Zacks Rank and Stock to Consider

Chevron currently has a Zacks Rank #3 (Hold). A better-ranked player in the energy space is Hess Corporation (HES - Free Report) , having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

Hess’ earnings are expected to soar more than 127% through 2019.

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