The union has been all over the media with advertisements against Chevron down here. The union has the votes for a work stoppage/strike. Balloting started on Wednesday and will close on the 19th. Watson had a off schedule EMERGENCY meeting scheduled for this week and cancelled? Not privy if anyone else is going. But the union wanted Watson. This to me is a sign that Johnny Boy's days are numbered. The revolving work stoppage is equivalent to a full strike in the US. Nothing moves . Chevron either goes to a 20/10 or Gorgon is toast.
26 replies (most recent on top)
Chevron does not have a good track-record on executing LNG projects, unfortunately. Do some research on the status of the Angola LNG project which was FID-ed end of 2007. Exxon, which was a partner in that project until then got out during the FID (tells you something!). That project came on line but had to be shut down and then currently being redone over the past 1-2 years. Now, you are talking about Gorgon, which is a much bigger scale project, both in scale and CVX equity. I am not surprised but as an employee & stockholder feel worried what it will do to our share price in the short to medium term.
Anything with an iq higher than that of a bag of stones did.
Shell when talking about Gorgon always said operational from 2016-2018. Maybe they knew how incompetent we are....
Cost overruns? How about not knowing significant quantities of mercury are present in the gas to be processed until after we began construction? Ask someone how much extra that cost. Ten to eleven extra figures is my guess.
Yes we hit a sub and Chevron tried to lay blame elsewhere on Contractors, the Government, the Navy and AIG (the insurer for Chevron) clearly explained you run the job and your schedulers tell the ship when to go and what route to take. Of course it is your fault.
Glad I checked back on this. It's 5:30 am here....got my coffee and I can shed some light. First I want to say these 3 things were major in cost overruns and delays but I can list 30 more off of the top of my head. Second all of these issues should have been solved in a few days but lingered for months with the Chevron Managers not understanding the work and trying to apply rules from a book from an office with an email. The wind speed was applying a general Chevron standard of 10 meters a second work must stop. Well all of the cranes were 15-20 rated speed. I was part of the study that clearly explained working wind capacities. Fo we are on the Ocean the wind speed is always 10 meters.. So one Chevron idiot does not understand the difference between manufactures limits vs. Chevron pulling out of their ass Standard and are cranes are just idle. We had to fly in the manufactures....yes more than 1. They were puzzled as to what the problem was? You can use it at 14....idiot Chevron manager argues Chevron says 10....AFTER MONTHS WE WERE USING THE CORRECT WIND SPEED for the manufacturer. The worker scheduling was a nightmare. Chevron insisted the project use Enterprise Risk Management Solutions (ERMS) to hire employees. ERMS was also used between employers and workers to organize transporting and the safety training inductions (2 weeks long given by a 20 something safety person who has never seen a construction site). EVERYONE was very vocal that the ERMS system would not work on start up. The project was to big with to much changing demand on labor. Understand you are shipping people out to a location by boats with limited dock space and limited people space on the working area. So timing is critical. We had CREWS THAT WOULD SIT FOR 30 days on a vessel twindling their thumbs! Sometimes docked at $400,000 docking fee a day! Much of this was totally disengaged management that kept saying ERMS is great! ERMS was also used for all the flights in and out....another nightmare. O.K.THE BOLTS UGH! Some mystery Chevron policy said an engineer must check the bolts to see if they were in spec. YES EVERY BOLT! Now on every other job an Iron Worker goes to a bin and grabs a bolt. There are also bolt lists given to the guys for reference. As you know if you have the wrong bolt because it won't fit! Now what Chevron insisted be done was the Iron Worker had to go to the supervisor and ask for bolts. They both had to then go to the engineer who checked the piece of paper singed it after review, who then took the supervisor to the shop and watched him pick the bolts for the day! They then had a fing sack of bolts lol. The worker then was expected to go to a maintenance program (Not designed for construction) and try to navigate bolt implementation paper work!!!!!!!!!!!!! ....The Chevron bolt policy lasted for 6 months. Several of us stopped the job to get this corrected. We pushed it up to Houston...to the very top. After that the iron worker then would check the job and say Oh we are installing I Beams today. Then go to the shop and say I need 10 boxes of M20 8.8 Bolts full thread lol! REALLY THAT IS HOW EASY IT IS . This was a big deal on time. We suggested that if the engineer wants to check bolts all day his ass needs to be on the steel where the work is being done. Of course that would never happen. Plus the engineers had no clue what type of bolts to use so they did not want to be embarrassed if a question came up. In any other Company a jackass engineer like that is run off. In Chevron it lasted 6 months and he got promoted.
Sitting on Gorgon. We get bits and pieces here in Houston. But it seems the big delays were 1. wind speed on lifts. 2. The administrative burden for transporting workers and 3. Bolts (Everyone says bolts but no examples of WTF the problem was or is?) Can you shed you light on these issues?
Chevron hit a submarine? WTF? Impounding of roll-on, roll-off vessel Combi-Dock III for three months by the Federal Government after it hit a submarine, and the $10 million paid out in compensation
Chevron was foolish to start 2 big projects in the same area of the world producing the same product - LNG. It is never wise to put too many eggs in the same basket, even at that time if it looked good. With the cost overruns and schedule slow downs at Gorgon (and every stock analyst knows about this) and even Wheatstone being behind schedule, there will be major problems ahead.
http://finance.yahoo.com/echarts?s=CVX+Interactive#)"range":"3mo","allowChartStacking":true)
Good thing I dumped all of my Chevron stock last year.
Oh one other part to this. Chevron blamed the high cost of labor for the cost overruns last year. You heard it I am sure. Do you hear it now??? NOPE! They were bitched slapped: I can attest this is 100% true (How about the bolt example....sound familiar?) Sydney University professor of employment relations Bradon Ellem, said the previous paper by BIS had shown conclusively that wages were an insignificant part of the project cost
"There's been a lot of quite misleading statements made about just how high those wages are, and about wages growth overall in the sector," he said.
Professor Ellem said cost blowouts could be attributed to both small and big-ticket items.
Bigger costs included the impounding of roll-on, roll-off vessel Combi-Dock III for three months by the Federal Government after it hit a submarine, and the $10 million paid out in compensation, delays to international vessels at Barrow Island because of a lack of space costing up to $500,000 per day per vessel, and major delays at sea resulting in vessels remaining stationary with full crews on board.
"This sometimes comes down to a lack of coordination round the specific phases of the project and often between the contractors," Professor Ellem said.
Smaller, more routine items included costs due to strict quarantine requirements for all materials brought onto Barrow Island and forcing skilled construction workers to fill in paperwork just to get the correct sized bolts.
"These small incidents over a number of months and years mount up and do amount to time delays and do amount to cost delays," he said.
"I think the issue of cost is one that needs to be examined much more closely and carefully than it has been in any research that I'm aware of previously."
An 'untapped wealth of experience' at Gorgon
Professor Ellem said Gorgon was an immensely complex project with a construction site based on a Class A nature reserve and with materials shipped more than 1,000km from Fremantle.
He said most projects of a similar size and scope around the world ran over cost and over time, and that the cost of Gorgon may have been underestimated and timelines have been too optimistic from the outset.
Contrary to the picture painted by business lobby groups, Professor Ellem said those working on Gorgon were often devoted to their jobs and wanted the project to succeed.
"Part of the solution to this is actually to have much greater dialogue between workers, their union representatives when they are unionised, the project managers, the contractors and the subcontractors," he said.
"There's an untapped wealth of experience and ideas about how to deliver the project on time and on budget."
The report said Chevron needed to rethink the issues and stop blaming workers.
"Meantime, neither Chevron nor the partners and contractors appear to see themselves as in any way accountable for the failings on their project," the report said.
"In short, both the evidence presented here and the pattern of blame-shifting raise questions about management practice and management accountability."
I am not sure if my fellow Chevron brethren understand the issue fully. If you do please ignore if you don't it's our 401K our pension and quite frankly our future as a whole. Here is a copy of the contract that expired in January. www.cfmeuwa.com/files/dmfile/GorgonAgreementnoMemo2.pdf. Back in the fall the union had overwhelming evidence of employee depression, stress, suicide. Think about being trapped at you office with your clueless bully boss. So they were very proactive in preparing Chevron for the vote in March on a 26/9 to a 20/10. This vote led to the current vote with 4,000 workers now eligible. The average worker would loose $8,000 on their own proposal. Chevron did not talk to the union and puts it on CB&I. See, Chevron thought this would be mute as Gorgon would be on line by now. So the day of reckoning is here. Chevron is saying the loss in days pushes the schedule back to far. Many believe it speeds it up as the guys aren't sick and will be in the right state of mind...TIF :-). This is the facebook page for the 20/10 push. https://www.facebook.com/2010Letitbegin Chevron has had a long time to to address this issue and the 20% kept saying this won't be an issue. You would in every bone in your body know that these guys need more time away or better management running the project. I hope this helps?
I agree Cobbler. I wish others would post....
China was hoped to be one of the customers for the LNG contracts, thus Chevron monkeyed around with a shale gas project in China from 2011 to 2013. Chevron was throwing good money after bad, even after dry holes, just to win the favor of the Chinese and make them our "friends" so that they would hopefully buy the Gorgan gas if nothing else. The shale gas project was fruitless and folded. Monkey business.
This is sobering not only the poor performance of the projects but the shift with the shale boom? So I did some research drinking a brewski and watching baseball. I had no clue there was an export terminal slated to export natural gas from Marcellus/Utica. I was about to shout BS as it takes 5 years to get FERC approval. But a bill was actually passed by congress? H.R.6 - Domestic Prosperity and Global Freedom Act which speeds up NEPA and therefore approval to build. Is this common knowledge and I am just out of it? Also the Marcellus shale is by far the biggest producer of gas 16,500 million cubic feet a day HOLY SHIT!. 3.7 trillion last year and over 4 trillion this year HOLY SHIT!. The Marcellus produces 20% of the entire United Stated gas produced? I am embarrassed I had to google this. Now with the Utica there is no doubt where the future of gas is? Pipeline running to the export terminal and gas line to east coast. Exactly why are we failing in this play. Chevron has all but abandoned any communication about so you know its done. It was big news then poof nothing. http://www.eia.gov/petroleum/drilling/#tabs-summary-2. Also thank you sitting at Gorgon. this is the stuff that truly brings context to the problems. The union said no more admin work.....now I understand what that is....
Great thread. Thank you gentleman.
Thanks to "Sitting on Gorgon" and "Anon132215 for your informative posts. Both your comments on the state of our LNG projects In Australia has shaken me a bit more than I expected. I'm here at home reading your posts with a double scotch on the rocks just to calm my nerves. I've worked for CVX for a very long time and have seen many successes and more than a few unfortunate mistakes (just to say it kindly). But the news you are delivering to us here pulls back more skin on the onion. Once the reality of Gorgon and Wheatstone see the day of light, sadly our stock price and reputation as a company will take a massive hit. I pray for the best. Thanks.
The Ugly Truth I am not so sure That the two big LNG plants are not going to be nearly as successful as once thought. Chevron initially planned to sell at least 85 percent of Gorgon output to long-term customers, betting that rising demand in the world's biggest LNG consumer, Asia, would keep prices high enough to pay back project costs, originally pegged at $37 billion in 2009.
Two events radically changed that calculation. An unconventional drilling boom has transformed the United States into the world's top natural gas producer and opened the door to substantial exports of LNG - already deals have been signed to sell in excess of 30 million tonnes of U.S. LNG, equal to about a third of Japan's annual imports.
A wave of new supply globally is also weighing on long-term prices, at a time when Asian demand growth is slowing. The contracts for Gorgon left to go to Dominion Cove Point which will start exporting mid to late 2017. Shipping cost are a small portion of the expense of LNG and the market will and has moved to cheaper shale gas. Long term contracts gas contracts in the east are tied to a barrel of oil. Even at this low price they can't compete with U.S. shale gas. WVU found that the Utica play contains technically recoverable resources of 782 trillion cubic feet (Tcf) of natural gas and around 1.9 billion barrels of oil. That’s higher than the U.S. Geological Survey’s (USGS) 2012 estimate of technically recoverable resources at 38 Tcf of gas and 940 million barrels of oil. The Marcellus keeps going higher. The sad thing is if Chevron would have been successful in PA they could offset. But we can't execute there just like we can't at Gorgon. I don't want to be a pessimists but these are the facts.
Let me try and explain the pickle we are in. First, contrary to most of the posts here Chevron did put very good people on this project. I will say this 75% of Chevron is broke and 25% is OK...people wise. On Gorgon it is 80% O.K. That being said the corporation did not empower the leaders at the project and the 20% have taken control. We have a fantastic, well had a fantastic working relationship with CB&I and Kentz. It has eroded substantially as we will not get out of there way. The 20% blame their PM's for our mistakes. Some examples. Chevron has insisted that the crafts complete paperwork for equipment and tools. CB&I and Kentz and the 80% said NO. These guys can not complete the required paperwork. Well Chevron leadership and the 20% won out and you get a wire rope sling instead of a Nylon Sling. And then you sit for 2 days. This example (just Put A instead of B) is routine and quite frankly pisses everyone off. Chevron brought in a consultant, KBR Logistics, to see why a 220 million dollar piece of equipment was held up being installed because the wrong bolts were ordered and then the wrong impact wrenches were ordered after the right bolts were ordered. KBR came to the 80% because they know we know, and said tell us what to report back. Another example: the docking fees are crazy. Half million. So we were told CB&I and Kentz not to dock. Well then equipment will then be taken to the platform and installed. When it should not be....an analogy would be not moving your tub in your new bathroom while there is no door jam as you know it won't fit when the door jam is in place. So we rip door jams out ahhh 20 times a day. Chevron did not take control of this project and let the unions do as they wished. They needed to trust the 80% and CB&I and Kentz. We were not empowered so the unions filled the vacuum. The Australian Manufacturing Workers’, Construction, Forestry, Mining Energy Union and the Electrical trade Union wrote and spoke to Chevron over and over asked that CB&I and Kentz be given clear authority to execute work as the 20% would bullying there changes and make the unions look like incompetent fools as shit rolls down hill. Can you imagine a union actually asking to be led? Please Mr. Chevron tell us what to do!!!!!!!!! YES THAT'S HOW BAD IT IS. Now the majority of the big lifting is done but without a drastic change in culture the very small but important steps to unloading test shipments is more than a year away. Everyone is so beat up they have given up. Also no one is truthful about delays as they don't want to be the one that sets off the panic. So everyone just says we are on track when we all know we are doomed. Also the 20% have blurred the lines of control. So now everyone is the boss. Schedules get changed. You leave that evening and the next morning a P&ID has changed with no MOC and the equipment is being installed. PSI is just crossed off and new information put in it's place. So do you really think start up will go smoothly?
Thanks for the update on the monthly costs, Anon132185. My information was off quite a bit, sorry to say. Suffice then, the situation in the Land Down Under is dire. Two to three billion per month is really bad. My bright side is I don't hold any Chevron stock in my 401k or outside investments. I dumped it about a year ago.
@The Ugly Truth Paul Segelie stated at recent town hall that we are spending 2-3 billion per month in Australia
I heard the cost estimates in Australia right now are about $1 Billion per month. No doubt that delays are a major concern. This latest problem with the labor union will certainly delay the project's startup date even more. Gorgon must be completed. There's no back-tracking now. Chevron is facing strong headwinds, as also the other oil and gas majors. But, Chevron is more exposed to crude oil prices than others are, and Is also in a cash crunch situation, more than the others too. We will weather this storm, but it won't be pretty. More bad news is on its way, but once these major capital projects come online and start making money (not costing money), Chevron will emerge as a strong company. I hope we learn from this and not begin to repeat the mistakes that brought us here.
Some have posted estimates of when they think gorgon will be operational. Does anyone have a defendable estimate of how much more money it will cost to bring online?
I am sitting on Gorgon. And my fellow employees words can not describe this situation. This project will haunt me for eternity. Factor in another year with Chevron being Chevron and the labor issue. This is 10X worse than Angola and we know the those results. Chevron tries to stick to systematic decisions...but only on the stupid stuff. It is a free for all on major major design criteria. Several of the managers on the prime contractor side has tried to issue SWA. Especially when the Typhoon was on its way. But no one will stop and take a breath which continues to lead to poor decisions. Others have to be on here from Gorgon. Chime in! This will be the demise of Chevron. Chevron latest push back on the 20/10 was "We will not invest in Australia EVER if you decide to implement an industrial action. The unions response?? "You don't have the money to invest in a copy paper, let alone a MCP". Also n o sense of urgency from leadership. The message in Memo's is "Get it done faster". They are terribly afraid to come here now.
This news was hinted a day or two ago by a poster in this forum who goes by AnonymousJoe. He received news from his co-workers in Australia of trouble down there which was going to lead to a further delay to the Gorgon project that would push back its completion another 6 to 9 months beyond the 1Q 2016 timeframe announced by Chevron execs in the July 31 Earnings Confrtence call. Yes, the same meeting where John Watson was absent from.
Is the industrial action/strike only voting on 20/10?