By David Winning


SYDNEY--Beach Energy said the Waitsia Stage 2 natural-gas project in Western Australia would cost more to complete and first production would be delayed, the latest setback to its flagship development.

Beach said it had identified more quality issues during pre-commissioning of systems at the Waitsia Gas Plant beyond those that it signaled to investors in February.

As a result, it now expected its share of capital expenditure to be between 600 million Australian dollars (US$395 million) and A$650 million, up from a forecast of A$450 million-A$500 million that was already higher than originally budgeted.

First gas from the project is now forecast to come by early 2025, later than the mid-2024 schedule outlined before. Beach said production would take three months to ramp up after the first gas is delivered.

"Having to redirect existing onsite labor to remedial works is slowing the progress of pre-commissioning activities, resulting in further delay and cost increases," said Brett Woods, who joined Beach as chief executive on Feb. 21.

Beach's difficulties at Waitsia trace back to the insolvency of the original contractor for the project. Beach and joint-venture partner Mitsui hired Webuild as a replacement for Clough, while raising the estimated cost of completing the project to as much as A$450 million at that time. But in May last year, Beach withdrew a target date for completion of the Waitsia Stage 2 and said it could no longer be certain there wouldn't be cost overruns given a tight labor market.


Write to David Winning at david.winning@wsj.com


(END) Dow Jones Newswires

04-07-24 1916ET