Chevron Corp. is directing about $7.5 billion for U.S. upstream projects in 2013, with most of the focus on deepwater Gulf of Mexico (GOM) projects, the producer said.
The San Ramon, CA-based oil major late Wednesday said it plans to spend $36.7 billion for capital projects next year, with $33 billion set aside for the upstream. In 2012 Chevron had a capital expenditure budget of $32.7 billion, and in 2011 capital expenditures were about $28 billion (see Daily GPI, Dec. 12, 2011). Nearly all (90%) of the spending program in 2013 is budgeted for oil and gas exploration and production projects, while about 7% will go to the downstream businesses.
“Consistent with long-stated strategies, we’re investing in a portfolio of very attractive oil and gas projects that will deliver volume growth and real value to our stockholders,” said CEO John Watson. “Next year’s program supports several projects currently under construction, including our Australian LNG projects and United States deepwater developments.
“As these and other projects come online, we anticipate production will reach our 2017 goal of 3.3 million boe/d,” which reiterates a July forecast (see Daily GPI, July 30). “With our strong balance sheet and industry-leading producing margins, I further expect to continue our pattern of significant stockholder distributions.”
“Major” U.S. capital investments next year are planned in the GOM deepwater, where Chevron is developing the prospective Jack/St. Malo, Big Foot and Tubular Bells projects. The Jack/St. Malo is about 55% complete, while Big Foot is close to two-thirds complete, and both are “on budget.” First production for those two development is expected in 2014. In Canada major investments are planned for the Hebron offshore oil development.
Much of Chevron’s capex in 2013 also will be directed to Australia, where it is building two large liquefied natural gas (LNG) export projects. A big glitch, however, are rising costs for the Gorgon LNG project on Barrow Island, which has been under construction for three years and is about 55% complete. The plant startup is scheduled in late 2014, with the first LNG cargo planned in early 2015.
Chevron now expects Gorgon to cost about US$52 billion to complete, which would be close to 40% more than its original $37 billion estimate.
“The factors contributing to the increased costs and schedule impacts include labor costs and productivity associated with Barrow Island site infrastructure, logistics challenges and weather delays,” the producer said. “In addition, currency impacts due to the strengthened Australian dollar and changes in the mix of currencies since project sanction account for approximately one-third of the projected increase in U.S. dollar outlays.”
Even at higher costs, Vice Chairman George Kirkland said Gorgon’s economics “are attractive. While investment requirements have grown, oil prices, which directly impact the overall revenue stream, have increased by approximately 80% over the same time period. In addition, the LNG nameplate capacity has increased by 4% to 15.6 million tons per year.”
Chevron’s exploration program, he added, “continues to discover additional gas resources that could support future expansions of our Australian LNG developments. The Wheatstone LNG project [also in Australia] is currently 7% complete and is on budget and on schedule.”
Global exploration funding includes “initial appraisal” of new acreage acquired overseas in over the past two years, as well as “continued exploration and appraisal activity in Western Australia, the Gulf of Mexico, West Africa and in several shale gas regions around the world.”
Close 30% of the upstream program is to target support maintenance activities and to mitigate field declines, “as well as highly profitable projects related to currently producing assets,” Chevron said. “Highlights of the 2013 base program include an increase in activity across several producing regions of North America as well as an increase in expenditures in Thailand and Indonesia.”
©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |