Across all of its upstream projects worldwide, Chevron Corp. has taken on an ambitious task to reverse its base business decline rates, which have routinely been around 4-5%, the producer's upstream chief said Friday.
George Kirkland, executive vice president of Chevron's Upstream and Gas division, said it was "too early to tell" whether the company will be able to achieve a lower decline rate in its oil and natural gas production. However, he told investors and energy analysts during a conference call Friday that it won't be from a lack of effort.
"There are many moving parts in the base business...workovers, rigs, location," so it's not a one-size-fits-all auditing process. However, Kirkland said Chevron put a plan in place about three years ago to audit from "the reservoir through the sale" for all of its facilities. Now, "we need time to see how the base rate is being influenced by it."
The El Segundo, CA-based producer has "great processes where we do our base business audits...from reliability, reservoir performance, surface facilities, subsurface facilities...to make sure there are no bottlenecks. We continue to turn up ways to optimize around the world."
Kirkland pointed to "great successes in South Texas on development wells. We've had good seismic technology, good results there. We've done other audits on water floods, and we are seeing the decline rates shallow out." He said the audits were being done "on a mix of things, not one focus. Some places, it's system reliability, some places, it's a facility that we think we can push more barrels through, some it's on more reservoir capability. We're doing all those type things...to optimize all of our systems around the world."
However, it may take "multiple years" over "multiple systems" to determine how successful the audits prove. "We have a 4 to 5% decline rate typically, but we're encouraged by the first nine months of this year," he said. "We want more run time, but I'm confident that the processes are in place, and it will help over a long period to improve our decline rates."
Kirkland also provided updates on some of Chevron's Gulf of Mexico (GOM) deepwater projects, two of which will ramp up over the next two years.
Six wells have been drilled, with five completed, on the Tahiti deepwater platform, Kirkland said. Chevron holds a 58% stake in that project. Subsea equipment installation at the facility, which will be moored in 4,000 feet of water, is under way, and installation of the truss spar will begin in the first three months of 2008, Kirkland said. The topsides also are near completion. Estimated production is expected to be about 70 MMcf/d of gas and 125,000 b/d of oil.
First production from Tahiti now is set for 3Q2009; it was originally expected to begin output by mid-2008. Construction of the massive project, which is about 140 miles offshore and 190 miles south of New Orleans, began in late 2005, but a contractor discovered mooring system problems in June after finding a problem on a similar installation on a BP plc project in the deepwater (see NGI, July 2).
"It's approximately 12 months later than originally planned due to the shackle replacement and the installation rescheduling," Kirkland noted.
The upstream chief also told investors that in July Chevron increased its stake by 12.5% to 75% in the Blind Faith GOM project, which is located in 7,000 feet of water about 160 miles southeast of New Orleans (see NGI, Oct. 17, 2005). Three development wells have been drilled and a fourth will be drilled by 2009. Offshore installation and well completions are expected this month, with first production in 2Q2008.
Blind Faith's semisubmersible facility is expected to have a production capacity of 45 MMcf/d of gas and 45,000 b/d of crude oil. The topsides are designed to accommodate upgrades to capacities of 150,000 MMcf/d and 60,000 b/d from satellite discoveries or third-party tiebacks.
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