It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Thursday, August 31, 2023
Savannah Port Expansion Continues with Arrival of Massive Container Cranes
USCG enforced a temporary safety zone as four massive cranes arrived in the Port of Savannah (GPA)
The expansion of the container handling capacity at the Port of Savannah, Georgia continues with the arrival of the second batch of massive container cranes which are part of the Georgia Ports Authority’s $1.9 billion infrastructure improvement plan. The massive cranes arrived aboard a heavy lift ship after a three-month trip from Asia and were so large the U.S. Coast Guard enforced a temporary safety zone in the Savannah River on August 24.
Designed by Konecranes of Finland, the all-electric cranes arrived on the 519-foot vessel BigLift Barentsz. The Netherlands-flagged heavy load carrier is off-loading two cranes standing 306 feet tall with a reach 24 containers wide that will be installed at Berth 1 at the Garden City Terminal to complete the rehabilitation project for the large ship berth. The two new cranes are in addition to four of the largest ship-to-shore cranes in North America that arrived at the berth in February. The first batch of cranes and the expanded berth returned to operation in July adding 1.5 million TEU in annual berth capacity.
Two slightly smaller cranes, standing 295 feet in height that also arrived on the ship yesterday will be installed on the upriver end of the terminal at berth 9. They will have a reach 22 containers wide. These two cranes along with the other two that arrived yesterday will complete installation and assembly and are expected to be in service in December.
The first batch of cranes arrived in February and have already contributed to a 25 percent capacity increase (USCG)
The addition of the new cranes comes as Savannah continues to see increasing demand and growth in its volume. July while down from the record of a year ago, still saw a 17 percent month-over-month increase in the number of boxes moved. The GPA highlights that it has had a compound annual growth rate over the last four years of 3.7 percent.
The GPA ordered a total of eight new giant ship-to-shore cranes. They have already increased annual berth capacity by 25 percent and extended the port’s ability to serve vessels capable of carrying more than 16,000 TEU. The port has also agreed to spend $170 million on 55 hybrid-engine rubber-tired gantry cranes as it continues the expansion and modernization of the port. Those cranes will also contribute to reducing emissions from the port operations.
At the end of 2022, GPA announced a two-phase project to expand Savannah’s container capacity. It includes relocating breakbulk cargo operations to Brunswick, Georgia along with the ro-ro vehicle operations. When completed in 2026, the plan calls for an additional 3 million TEU capacity at the Port of Savannah.
WWIII BEGINS IN THE SOUTH CHINA SEA
US and Palau Strengthen Maritime Security Responding to Chinese Incursions
New agreement with Palau expands the USCG's long-standing efforts in the Pacific targeting illegal fishing and as a deterrent to Chinese incursions (USCG file photo)
The United States has signed an expanded bilateral law enforcement agreement with the small Pacific nation of Palau located in the western Pacific east of the Philippines. This latest agreement which follows similar U.S. diplomatic moves in the region is seen as another step in the U.S.-China chess game for influence in the region and in response to Palau’s support of the U.S. while highlighting what it said were recent “unwanted activities” by China.
The U.S. has had a strong relationship with the Republic of Palau which is comprised of approximately 340 islands, islets, and atolls. The U.S. was assigned by the United Nations administrative authority to the region after World War II and for more than two decades has had the Compact of Free Association, which was enhanced last spring.
U.S. officials highlighted today that they signed a new agreement with Palau on August 23 designed to strengthen maritime security and stewardship in the Pacific. They called the agreement a “regional milestone,” which enables the U.S. Coast Guard to enforce regulations at sea in Palau's exclusive economic zone (EEZ). Under the terms, the U.S. Coast Guard is permitted to undertake boarding and security efforts on behalf of Palau without a Palauan officer present.
"The United States and the Republic of Palau share common interests and values supporting a free and open Indo-Pacific," said U.S. Embassy Koror's Chargé d'Affaires, Andrew McLean. “This agreement will help us meet our security commitments in Palau by increasing maritime domain awareness and preventing IUU Fishing within Palau's EEZ.”
Officially, the focus of the agreement is to protect against Illegal, Unreported, and Unregulated fishing, while Palau’s President Surangel Whipps, Jr., noted that he hopes it will also “deter uninvited vessels from conducting questionable maneuvers within our waters.”
Earlier this year, Whipps called out the United States highlighting under the long-standing agreements the U.S. is responsible for his country’s security. He told reporters that Chinese boats have made at least three “uninvited” entries into Palau’s territorial waters in the last two years. He has accused China of conducting “surveying activities” while the scope of China’s illegal fishing activities is well known.
During the signing ceremony, President Whipps said, "Presence is deterrence. This agreement significantly strengthens presence and enforcement options to counter illicit maritime activity in Palau’s EEZ.”
The agreement with Palau follows a similar agreement the U.S. entered into with the Federated States of Micronesia in October 2022 which also permits the USCG to conduct boardings and activities in the country’s waters. The U.S. in May 2023 also entered into a new agreement with Papua New Guinea and recently undertook its first joint maritime operations with the country. Over the past few weeks, the USCG sent three cutters, USCGC Frederick Hatch, USCGC Myrtle Hazard, and USCGC Oliver Henry, into the region, conducting four patrols over 44 days and conducting seven boardings.
The U.S. has moved to expand its agreements after in the summer of 2022 it was turned away by the Solomon Islands, which is seen as moving to support China. A U.S. Coast Guard cutter requested permission for a pre-planned visit and resupply stop in the Solomon Islands, but the government did not respond and grant the permission. The government of the Solomon Islands later said it intended to close its ports to all foreign naval ships.
The USCG highlights that the U.S. has a total of 12 bilateral maritime law enforcement agreements with Pacific Island countries. The U.S. has been actively supporting the Philippines in its recent interactions with the Chinese, including the recent resupply mission at Second Thomas Shoal. The Coast Guard also annually undertakes exercises and patrols in the region. In addition to enforcement activities, it is seen as an effort to display the flag and deter further Chinese incursions across the region.
Corsica Ferry Experiences a Birth and a Death in One Crossing
A rescue swimmer helps steady a litter carrying a pregnant woman for a medevac from the ferry Mega Andrea (SIS 2b)
On Monday, local firefighters on Corsica were called out twice in one night to meet the same ferry - first for a birth, then for a death.
At about 2200 hours, firefighters were called to evacuate a woman who was about to give birth aboard the Corsica Ferries vessel Mega Andrea. The expecting mother was seven months pregnant, and the baby would be premature and in need of extra care. The weather was too rough for the ferry to enter port, and it was operating in a holding pattern off the harbor entrance.
Corsica's fire service dispatched a helicopter with a doctor and two rescue swimmers on board, and they made preparations to hoist the woman aboard. Despite severe weather, the medevac was successful.
Ideally, the service would have liked to deliver the patient directly to the Bastia hospital, but the weather was so bad that this was not possible. Instead, she was brought to the Poretta airport, where EMS personnel met the helicopter to conduct a transfer. The mother was transported to the hospital, and the baby was successfully delivered - though it was still in need of medical attention. On Tuesday, the rescue service dispatched another helicopter to the hospital to fly the infant to Nice for advanced care.
This evolution ended well, but the night was not over for the passengers and crew of the Mega Andrea. At 0100, three hours after the medevac, the ferry was unloading at Bastia. A car that had just driven off the ship went off the pier and into the water in front of the ferry terminal. Security guards from the seaport jumped into the water in an effort to save the car's passengers, and they pulled three from the vehicle alive. The survivors had swallowed saltwater but were otherwise unharmed.
A fourth individual, an older man, did not escape and went down with the car in 30 feet of water. Firefighters arrived on scene shortly after, and they attempted to rescue the last occupant of the vehicle. Divers reached the car and retrieved the man's body at about 0210 hours.
An investigation into the cause of the car accident is under way. In the meantime, the port has called in a psychological support unit to care for employees who may have been affected by the casualty.
Uncertainty Over HMM Sale After Banks Only Receive Four Bids
First round of bidding for the government's stake in HMM ended on Monday (file photo)
Uncertainty emerged in South Korea over the fate of HMM and the next steps the state-run banks might take after the first round of bidding only received three domestic proposals plus an offer from Germany’s Hapag-Lloyd. The stock market in South Korea responded on Tuesday by driving the price of the shipping line’s shares down by more than four percent as speculation mounted on the news that Korea’s largest corporations were not participating in the process.
Korea Development Bank and Korean Ocean Business Corporation were believed to favor one of Korea’s large conglomerates as the buyer for HMM. Leading up to the bidding process, the banks had said they would be looking for a company with sufficient capital and management ability that could help continue the growth of HMM and contribute to the country’s role in the industry. Despite the downturn in the shipping market, the banks said their financial advisory committee had said it would be possible to proceed with the sale to privatize HMM.
Reports in the Korean media are that the largest corporations such as Hyundai and POSCO did not participate in the first round which closed on Monday. In addition, SM Line which had announced it would be a bidder did not submit an offer after reviewing the prospectus. The company had said in prior interviews despite already purchasing shares of HMM on the market it would only bid up to approximately $3 billion. Consumer goods exporter, Global Sae-A, also declined to submit a proposal after registering for the bidding.
The three bids from domestic companies came from Harim, a domestic food company that is a large investor in Pan Ocean, South Korea’s largest dry bulk shipping company. Dongwon, another food producer that also has investments in logistics and port operations with the Dongwon Pusan Container Terminal submitted a proposal as did LX, a trading company involved in semiconductors, building materials, and logistics.
One of the issues is the size of the transaction. The banks hold both shares and convertible bonds and warrants. Depending on the final agreement, the conversion could drive the value of the HMM sale to between $3.9 and $4.85 billion. KDB had indicated it would convert most of the bonds but still hold a smaller position, with reports in the media saying the bank was also rumored to be seeking to limit HMM’s ability to issue dividends after the sale.
Harim Group reportedly formed a partnership with private equity investors JKL Partners, but according to the media reports none of the companies have sufficient funds to complete the proposed transaction. All the companies are smaller than the $18 billion market valuation of HMM, raising speculation that they would have to heavily leverage the transaction with debt or acquisition financing. Some speculation has been that they might seek to do it as a leveraged buyout using HMM’s cash. This could present challenges to HMM which is proceeding with its growth strategy including orders for new containerships and a new class of heavy lift vessels as well as acquiring a secondhand tanker.
The Korean banks are thought not to favor selling HMM internationally although Hapag entered a bid and has the financial strength to proceed with the transaction. Some speculation is that one of the Korean bidders might partner with Hapag as an investor for the acquisition.
The process called for the qualified bidders to undertake a due diligence and submit final proposals. A preferred bidder was to be selected for final negotiations. KDB and KOBC however had said if no qualified bidder emerged, they could amend or cancel the sale. Speculation is that the banks might suspend the process after the first round citing the market conditions in the shipping industry.
"Multiple" Offshore Oil Workers Medevaced Due to Severe Heat Wave
A severe heat wave across the U.S. Gulf Coast has created a new hazard for offshore oil and gas workers, according to the U.S. Bureau of Safety and Environmental Enforcement (BSEE). Water temperatures along the Texas and Louisiana coastlines are approaching 90 degrees, and the heat index has risen as high as 110 degrees Fahrenheit in some areas.
These conditions are common in the Persian Gulf offshore oil industry, but are less often found on the U.S. Gulf Coast, and the industry's safety regulator says that it will have to adapt to higher temperatures. In "multiple recent instances," workers in the U.S. offshore oil patch have been so affected by the heat that they had to be evacuated to shore for medical evaluation, according to BSEE.
In one case, a platform operator noticed a contractor was experiencing dehydration symptoms. The individual was given fluids and told to rest, and he was later transported to shore for further evaluation. In another, an onsite medic observed that an employee was showing signs of severe heat exhaustion. The employee was treated with IV fluids on board. After consulting with doctors on shore, the individual was medevaced by helicopter to a local emergency room for further care.
Extreme heat has not only affected the U.S. Gulf. July 2023 was the hottest month on record worldwide, according to the World Meteorological Organization, and average global ocean surface temperatures hit a new record in early August.
An emerging El Nino pattern in the Pacific is a major contributor, along with other natural factors. Average temperature increases due to climate change have also raised the baseline and increased the odds of large scale heatwaves like the one recently experienced in Texas, per the World Weather Attribution Project, a partnership between researchers at Imperial College London and The Royal Netherlands Meteorological Institute.
"Maximum heat like in July 2023 would have been virtually impossible to occur in the US/Mexico region and Southern Europe if humans had not warmed the planet by burning fossil fuels," concluded WWA in a recent assessment.
Warming conditions will likely accelerate over the next year as the current El Nino event gains strength, and more records may be ahead - including the first-ever crossing of the 1.5 degree C temperature increase threshold targeted by the Paris Agreement.
"It is very likely that one of the next five years will actually be the warmest on record and a 66 percent chance — and more likely than not — that we will temporarily exceed 1.5 degrees of pre-industrial value," said Chris Hewitt, director of climate services for the WMO, speaking recently to VOA.
Elevated temperatures may affect offshore oil producers in the U.S. Gulf of Mexico, and BSEE advises operators to manage the effects of high heat on their workforce as they continue to extract oil and gas. There will be plenty of work activity to monitor: Offshore GOM E&P is expanding at a healthy rate, and oil output is expected to rise through 2027, according to the most recent forecast from the Bureau of Ocean Energy Management.
Despite Sanctions, Russia's Arctic LNG 2 On Track for Startup in 2023
The first gravity based structure and liquefaction train of the Arctic LNG 2 plant arrives in the Gulf of Ob, August 2023 (Novatek)
Despite sanctions related to the invasion of Ukraine, Russia's Arctic LNG 2 project is on track to go live at the end of this year, according to Chinese state oil and gas company CNOOC. The first liquefaction train arrived at its destination in the Gulf of Ob last week and is already in commissioning.
The giant LNG project initially relied on Western technology providers like Technip and Siemens, but these firms had to back out due to sanctions last year, taking their extensive experience in sophisticated energy projects with them. The first train was about 90 percent complete when they departed in 2022, but developer Novatek has been able to get the first liquefaction plant finished with the substitution of Chinese suppliers.
China has a significant investment in Arctic LNG 2, both as a financial backer and as a future customer. CNOOC holds a 10 percent share, and CNPC holds an additional 10 percent. France's TotalEnergies and Japan's Mitsui hold another 10 percent each.
The massive plant was built atop a concrete gravity-based structure (GBS), which was floated from Murmansk to the Arctic port of Sabetta in July and intentionally sunk onto a prepared permanent site last week. Commissioning is under way for the first plant now, and the two additional plants are under construction.
Image courtesy Novatek
According to Novatek executive Maxim Mikhalev, the second train's GBS has been finished and topsides are under construction at the firm's yard in Murmansk. Overall completion was at about 80 percent as of late April, putting train two on track for delivery to the Gydan Peninsula in 2024. The shoreside infrastructure at the port of Ultrenneye is nearly fully complete, the company says.
Some Ukrainian leaders have called for full Western sanctions on Russian LNG projects. Western secondary sanctions - that is, measures targeting all participants in a sanctioned activity, regardless of nationality - would help cut into Russian state revenues, according to Ukraine Parliament member Andrii Zhupanin. So far, Ukraine's allies have refrained from using secondary sanctions, which can have serious unintended side effects on markets and neutral nations.
"Secondary sanctions are necessary to compensate for an obvious weakness of existing primary provisions that preclude U.S. and EU companies from participating in Russian LNG infrastructure buildout, which is implicitly inviting Chinese companies to take their place," Zhupanin argued in a recent op-ed. "The introduction of secondary sanctions on Russia’s LNG sector in full swing, in particular, to force a full stop of the Arctic LNG-2 project, is the obvious necessary step that the EU and the US must implement to uphold [their] stated security and climate policies."
Crowley and Morgan Stanley Launch JV to Develop Wind Port Infrastructure
Crowley is involved with the Salem redevelopment project and looks to use the new JV with Morgan Stanley to redevelop existing facilities to support the offshore wind energy sector (Crowley)
Crowley is forming a new partnership with global financial services powerhouse Morgan Stanely as they look to further realize the emerging infrastructure opportunities to support the U.S. offshore wind energy business. The companies announced the formation of a new joint venture that will focus on accelerating long-term contracted growth infrastructure opportunities.
To be known as Crowley Wind Services Holdings, Morgan Stanley Infrastructure Partners (MSIP), the private infrastructure investment platform within the advisory firm, will hold a majority stake in the joint venture. Crowley will operate the business which will focus on repurposing and operating existing U.S. port facilities and leasing them under long-term contracts to offshore wind developers.
The companies highlighted the critical role the onshore terminals are planning in the growth of the offshore wind energy sector and the strong demand that will be created as the U.S. proceeds toward its target of 30 GW by 2030 and 110 GW by 2050. They highlight that the terminal business will support the manufacturing, assembly, and storage of wind farm components as well as provide developers with maritime services such as Jones Act-compliant feedering vessels to transport components from ports to offshore wind installations.
“We believe port infrastructure is essential to the build-out and long-term maintenance of offshore wind projects,” said Daniel Sailors, Managing Director, MSIP. “We are excited to partner with Crowley to provide the foundational infrastructure that will enable the development of this important industry.”
The joint venture looks to build off Crowley’s existing business expertise in end-to-end maritime and logistics capabilities using Morgan Stanley’s financial strength and access to capital.
Crowley has already entered into the wind port business, including port operations and terminaling, feedering vessels and operations, and project management. Through a public-private partnership with the Commonwealth of Massachusetts’ Clean Energy Center and the City of Salem, Massachusetts, Crowley plans to begin construction this fall on the Salem Wind Services Terminal, which will support the development and operation of offshore wind lease areas off the northeast U.S. coast. The project calls for repurposing an old power plant and parts of the space is already being used to support the first offshore wind farms being built near Martha’s Vineyard.
In addition, Crowley is pursuing the development of a U.S. West Coast terminal in Eureka, California, in a public-private partnership. Crowley also has a right-of-first-refusal agreement to lease and potentially develop a wind services terminal at Port Fourchon, Louisiana.
World's Largest Floating Offshore Wind Farm Officially Opened
Hywind Tampen located in the North Sea is the largest floating offshore wind farm (Ole Jørgen Bratland photo courtesy of Equinor)
Norway marked the official dedication of the Hywind Tampen wind farm with a ceremony attended by Crown Prince Haakon of Norway and Norwegian Prime Minister Jonas Gahr Støre on the Gullfaks C platform in the North Sea. Billed as the world’s largest floating wind farm the project is unique in that it is being used to power mature offshore oil production while it is also seen as a further proof of concept project to support the development of floating wind turbines.
The wind farm was developed by Equinor with the company noting it took five years for the project to go from the drawing board to completion. The wind farm, which generated its first power in November 2022, consists of 11 wind turbines. Hywind Tampen has a system capacity of 88 MW and is expected to cover about 35 percent of the annual need for electricity on the five platforms Snorre A and B and Gullfaks A, B, and C.
The wind farm is located nearly 90 miles from shore. At a water depth ranging between approximately 850 and 980 feet, Hywind Tampen will be exposed to some of the harshest offshore conditions. The field lines to the northwest of the city of Bergen, Norway.
Gullfaks in the North Sea with Hywind Tampen in the background (Ole Jørgen Bratland photo courtesy of Equinor)
The company highlighted that 40 years ago Gullfaks was Equinor's major qualifying test in field development on the Norwegian continental shelf. Gullfaks along with Snorre have now become the first oil and gas fields in the world to receive power from offshore wind, reducing CO2 emissions from their operations.
Development of the project was further complicated by the pandemic. Equinor reports they encountered COVID-related costs, delayed deliveries, and quality issues with some deliveries which also resulted in follow-up issues. They also had to manage increased market prices, currency exchange effects, and other challenges. Despite that, the project is fully operational as of August 2023.
They expect the larger size and challenging location of Hywind Tampen will contribute to the understanding and future development of floating wind. They note that already the project was able to reduce the cost of installed MW by approximately 35 percent compared to the first floating wind farm, Hywind Scotland.
Enova, a state enterprise owned by the Ministry of Climate and Environment launched in 2001 to promote environmentally friendly energy consumption and production provided approximately $217 million toward the development of Hywind Tampen. In addition, the Norwegian Business Sector's NoX fund supported the project with just over $50 million to stimulate technology development within offshore wind power and emission reductions.
Hywind Tampen is the first offshore wind farm in Norway, demonstrating the opportunities for renewable power production on the Norwegian continental shelf.
His Majesty Crown Prince Haakon and Prime Minister, Jonas Gahr Støre making the ceremonial connect August 23, 2023 (Ole Jørgen Bratland photo courtesy of Equinor)
U.S. Approves Revolution Wind to Become Fourth Large, Offshore Wind Farm
Revolution Wind becomes the fourth large offshore widn farm to complete the U.S. review process (Orsted)
The Department of the Interior today announced its approval of the Revolution Wind offshore wind farm project which will provide energy to both Connecticut and Massachusetts. This is the Department’s fourth approval of a commercial-scale, offshore wind energy project as the U.S. offshore wind energy industry continues to gain momentum.
Located about 15 nautical miles southeast of Rhode Island and about 12 nautical miles from the coast of Martha’s Vineyard, Revolution Wind will have an estimated capacity of 704 megawatts of energy, capable of powering nearly 250,000 homes. The project will split its power providing about 400 MW to Rhode Island and the remaining 304 MW to Connecticut. In the final form approved by the Bureau of Ocean Energy Management, the project will consist of 65 wind turbines and two offshore substations.
The project is being developed in a partnership between Ørsted and Eversource. The companies acknowledged the milestone for the project saying they remain on track to begin onshore construction activities in the coming weeks. Offshore construction is scheduled to ramp up in 2024 with the project expected to be operational in 2025.
“Companies have quadrupled their U.S. offshore wind investments to over $20 billion, representing thousands of good-paying union jobs,” said Assistant to the President and National Climate Advisor Ali Zaidi, highlighting the release of BOEM’s record of decision as the next major step in the industry. “Today’s approval of a fourth major offshore wind project is our latest permitting milestone that will help strengthen America’s energy security, make our power grid more reliable, lower energy costs, and cut dangerous climate pollution.”
Construction on the first two large offshore wind farms is already underway in Massachusetts and New York. Avangrid which is leading the development of Vineyard Wind 1 which will be near Revolution Wind highlights that the first nacelles and wind turbine blades have now arrived at the staging facility in Massachusetts. The first two projects, Vineyard and South Fork, are targeting completion before the end of the year and BOEM previously also approved the Ocean Wind 1 project offshore New Jersey.
BOEM highlights that the review process for Revolution Wind included considering the final Environmental Impact Statement alternatives, including public comments received. The Department approved Revolution Wind’s Construction and Operations Plan (COP) under its preferred Alternative G identified and analyzed in the EIS. This preferred alternative will meet energy needs by installing fewer wind turbines than originally proposed by the developer to reduce impacts to visual resources, benthic habitat, and ocean co-users. Alternative G includes up to 79 possible locations for the installation of 65 wind turbines and two offshore substations within the lease area. The Record of Decision is published on BOEM’s website.
The Record of Decision includes measures aimed at avoiding, minimizing, and mitigating the potential impacts that may result from the construction and operation of the project. Among them, Revolution Wind has committed to establishing fishery mitigation funds to compensate losses directly arising from the project incurred by recreational and commercial fisheries in Rhode Island and Massachusetts, and to creating a direct compensation program to reimburse lost revenues for fisheries from other states. Additionally, Revolution Wind has committed to measures such as vessel speed restrictions and construction clearance zones to reduce the potential for impacts to protected species, such as marine mammals, sea turtles, and Atlantic sturgeon.
“Together with industry, labor, and partners from coast to coast, we are building an entirely new industry off the east and west and Gulf coasts,” said Interior Secretary Deb Haaland.
The Biden administration highlights that companies have announced 18 offshore wind shipbuilding projects as well as investments of nearly $3.5 billion across 12 manufacturing facilities and 13 ports to strengthen the American offshore wind supply chain. Ørsted and Eversource, for example, have committed to more than $100 million of direct investment to the State Pier redevelopment project in the Port of New London, Connecticut to create a marine terminal that is being used for staging and assembly. They have already also ordered five crew transfer vessels that will be built by Blount Boats and Senesco Marine both in Rhode Island.
BOEM reports it remains on track to complete reviews of at least 16 offshore wind project plans by 2025, representing more than 27 gigawatts of energy.
Union Members Authorize September Strike at Chevron Australia’s LNG Ops
Chevron's Australian LNG operation accounts for a fifth of global supply (Wheatstone file photo)
The Offshore Alliance which represents workers at Chevron’s Australian LNG production and distribution facilities scheduled an unspecified industrial action for September 7 after receiving nearly unanimous support for a strike from the 500 union members working at the company’s three plants. With Chevron Australia accounting for more than five percent of global LNG production, the news of the strike sent the European market for liquified natural gas up more than 10 percent according to Reuters.
Voting for a potential strike at Chevron’s facilities began last week with the union reporting in a filing to Australia’s Fair Work Commission that 99 percent of the 450 members at Chevron’s Gorgon LNG facility and Wheatstone downstream processing plant voted at the end of last week in favor of a job action. Today, polling was completed for the Wheatstone offshore platform where all 37 union members also voted to support a job action.
Under Australian labor law, the union needs to give notice and the action could be for a set number of hours, a ban on certain functions, or a full strike. Reuters is quoting unnamed sources saying that the union plans to stop work for three hours on September 7 and then escalate the number of hours if there is not sufficient progress on the negotiations.
Chevron confirmed that it had received the notice without announcing the details of the planned action. A company spokesperson said they don’t believe a job action is necessary for an agreement to be reached. In similar negotiations, Woodside and the union had set last Wednesday as a deadline in their talks and after a marathon negotiating session reported an in-principle agreement. Chevron combined with Woodside represents a tenth of global LNG production.
“Our members are locked and loaded and ready for Protected Industrial Action,” the Offshore Alliance wrote on its social media account. “A settlement is increasingly likely to come after we ‘jam up’ Chevron’s LNG exports.” The Offshore Alliance was formed as a combination of the Maritime Union of Australia and the Australian Workers’ Union to represent the employees at the major LNG producers.
Chevron’s Gorgon facility has an annual capacity of 15.6 million metric tons. In June the company reported it had production of first gas from the Gorgon Stage Two development off the northwest coast of Western Australia which included the addition of 11 wells and accompanying offshore production pipelines and subsea structures to maintain feed gas supply for the gas processing facilities on Barrow Island. The facility is a major LNG supplier to Asia Pacific as well as Australia’s domestic supply of LNG.
Just last week, a five percent increase in capacity was announced at the domestic gas facility at the Chevron-operated Wheatstone Project near Onslow. The company completed technical enhancements and plant modifications to increase production rates. The facility handles nearly nine million metric tons of LNG annually.
The Offshore Alliance highlighted that it had reached a new agreement with three of the operators and is now concentrating on Chevron saying that “no members will be left behind in our eventual settlement of our bargaining claims,” which center on wages and working conditions. INPEX reached terms on a new agreement early in 2022, but Shell only came to terms with the union after a 76-day job action that ended last September. Woodside has said it was confident that the in-principle agreement reached last week could be finalized and the union agreed not to proceed with a job action while the agreement was completed, submitted to the membership for a vote, and sent to the Fair Work Commission for approval.
Woodside and Australian Unions Reach In-Principle Agreement on LNG Contract
North Rankin Complex, North West Shelf Project, Western Australia (Woodside)
Woodside Energy and its labor unions announced that they have reached an in-principle agreement for an enterprise labor agreement for the company’s liquified natural gas operations in Australia. Energy market analysts welcomed the news noting that the threatened strike against Woodside and Chevron was putting as much as 10 percent of the world’s LNG supply at risk. Negotiations are still ongoing with Chevron.
Representatives for the Australian Workers’ Union called the agreement a “huge win” for members. The contract if completed would the be first enterprise-wide agreement in decades covering both on-shore employees and the over 150 workers at Woodside’s offshore LNG platform Goodwyn Alpha, North Rankin Complex, and Angel Platform. It also marks the union’s successful negotiations with three of the four large producers in Australia.
The Offshore Alliance, which is made up of the Australian Workers’ Union and the Maritime Union of Australia, called the agreement a “positive step” saying that Woodside had made a strong offer without the unions having to proceed with their threatened industrial action. The alliance reported that the in-principle agreement came as a 15-hour meeting and at the deadline set by the union to start a countdown toward a strike. The unions had authorization to begin a strike which was expected to start as early as September 2.
“Despite the lengthy road to this point, we are relieved that Woodside has now taken a more pragmatic approach and decided to offer our members an enterprise agreement with industry-standard terms and conditions,” said AWU WA Secretary Brad Grandy. Woodside in its statement said that the agreement covered all claims related to remuneration and other terms and conditions of employment.
Union members were scheduled to meet today to review the terms of the in-principle agreement and determine next steps. Woodside said it would be working with the union to finalize the agreement which would require a union vote and approval by Australia’s Fair Work Commission. They noted that the unions had agreed not to file for an industrial action while the process is underway while the union said members would also consider withdrawing their notices.
Just four days ago, the Electrical Trades Union which was negotiating alongside the alliance said it was “gearing up to take on the giants,” referring to Woodside and Chevron. “ETU members refuse to settle for anything less than they rightfully deserve,” the union warned.
Last year, the unions held out for 76 days in a strike against Shell before reaching a new agreement. Workers at INPEX secured a deal with the union earlier in 2022.
Chevron remains the last of the majors to reach terms with the union. The Offshore Alliance members began voting to authorize a possible strike. Union members at both Chevron’s downstream services and Gorgon platform were due to return their ballots today while workers at Chevron’s Wheatstone platform were due to submit their votes on Monday, August 28.
Industry analysts are hopeful that the initial agreement with Woodside would clear the way for a similar resolution with Chevron. Traders in LNG remained cautious but the announcement from Woodside and the unions took some pressure off the market which was bracing for a potential strike.
