Cyclone Narelle Hits Wheatstone, Gorgon as 30M Tonnes of LNG Go Offline

Chevron confirmed on Thursday that its Gorgon and Wheatstone LNG facilities in Western Australia have suffered significant outages. The North West Shelf project, operated by Woodside Energy, also went offline as Cyclone Narelle intensified into a Category 4 system. The combined shutdowns have removed more than 30 million tonnes of annual production from the global gas market.

The Bureau of Meteorology has tracked Narelle as it moves toward the Pilbara coast. The system reached Category 4 intensity over open water and is expected to make landfall as a Category 3 storm. Energy analysts estimate the disruption accounts for roughly 8% of total global LNG supply.

Estimated the cyclone was disrupting more than 30 million tonnes a year of Australian LNG supply.

— Saul Kavonic, Energy Analyst, MST Marquee

The North West Shelf facility typically produces 16.9 million tonnes of LNG annually. Operational data shows output has already fallen to a projected 14.3 million tonnes due to the forced weather halt. Woodside Energy has not provided a timeline for restarting the facility, which remains in a safe shutdown state.

Supply reliability and importer concerns

Major importers in Japan and South Korea have expressed concern over the stability of Australian gas deliveries. This marks the third weather-related disruption to Western Australian gas exports in the last eighteen months. Analysts suggest the frequency of these events is damaging Australia's reputation as a reliable energy partner.

This current disruption does little to reassure LNG importers about the reliability of LNG supply.

— Josh Runciman, Analyst, IEEFA

Chevron reports that its Wheatstone facility is currently operating with minimal staff. Most non-essential personnel were evacuated from the offshore platforms and the mainland plant on Tuesday. The Gorgon facility on Barrow Island has also been secured against the projected storm surge.

Economic impact and cost of living

The reduction in domestic gas availability is expected to flow through to Australian electricity markets. Independent analysts have warned that the supply crunch coincides with seasonal demand peaks, creating a 'triple whammy' effect on household energy bills.

When you look at the cost of living and fuel prices, the impact of the triple whammy could be really quite significant.

— Jeanette Roberts, Independent Gas Analyst

Tropical Cyclone Narelle is the strongest system to threaten the Pilbara region this season. The Bureau of Meteorology continues to issue hourly warnings as the system tracks south-southeast. Port operations at Dampier and Port Hedland remain suspended until further notice.

The energy sector is awaiting the first post-landfall damage assessments to determine the duration of the shutdown. Spot prices for LNG in North Asia have already reacted to the news, climbing 12% in Friday's trading. Global markets remain sensitive to any further disruption to Australian production volumes.