Chevron's (CVX) Wheatstone LNG Plant Outage Shuts 25% Output
Chevron Corporation’s (CVX) Wheatstone liquefied natural gas (LNG) plant in Australia, responsible for approximately 5% of the global LNG supplies, recently reported a production outage due to an ongoing labor dispute, per media reports.
According to CVX, it is attempting to restart full production at Wheatstone LNG, following a fault that has impacted about 25% of LNG production. Approximately 500 workers at the Wheatstone and Gorgon LNG plants have been participating in limited strikes of up to 11 hours since last week due to a labor dispute, although it is unclear if this is the reason behind the fault. The workers union stated that it intends to escalate industrial action beginning Thursday and could stop working entirely while refusing to do crucial tasks, such as loading LNG tankers.
While faults and outages are not uncommon in LNG plants, energy analysts warn that strike actions could prolong the time required for repairs, potentially leading to supply disruptions. However, Goldman Sachs believes that there is a low probability of a prolonged outage leading to a substantial spike in natural gas prices.
Chevron has requested regulatory intervention in the labor dispute and the matter will be heard on Sep 22. A decision in favor of regulatory involvement could potentially expedite resolution efforts and minimize the impact on global LNG supplies.
Zacks Rank & Key Picks
Chevron currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the energy sector are USA Compression Partners, LP USAC and Global Partners GLP, both currently sporting a Zacks Rank #1 (Strong Buy), and Core Laboratories Inc CLB, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
USA Compression Partners is one of the largest independent natural gas compression service providers across the United States in terms of fleet horsepower. USAC has witnessed an upward earnings estimate revision for 2024 in the past seven days.
Global Partners is a Delaware limited partnership, formed by affiliates of the Slifka family. The partnership owns, controls or has access to one of the largest terminal networks of refined petroleum products in New England. GLP is one of the largest wholesale distributors of distillates. It has witnessed an upward earnings estimate revision for 2023 and 2024 in the past 60 days.
Core Laboratories’ strong presence in the emerging shale plays and its global footprint will provide for steady growth rates going forward. CLB’s technology-heavy portfolio of proprietary products and services gives it the opportunity to optimize production from new and existing fields. Core Labs has witnessed an upward earnings estimate revision for 2024 in the past 60 days.
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