Chevron Corp.’s worldwide natural gas production is expected to account for close to 40% of its net output by 2020 — up from 32% in 2007, company officials said last week.
The San Ramon, CA-based major, which has invested an estimated $1 billion in each of its 40 oil and gas capital projects worldwide, is pinning its North American upstream success this year on a few key areas: the deepwater Gulf of Mexico (GOM), the Piceance Basin of Colorado, and two new oil and gas developments in Canada and Alaska. Projects in the pipeline that are slated to move forward include the Big Foot and Tonga developments in the GOM. Together with the global developments, the company is targeting total reserves of about 11.3 billion boe by the end of 2010 — more proved reserves at the end of the decade than it has today.
Reserves are expected to grow about 5% over the next three years from current levels. The gains won’t offset a sharp decline in reserves between 2006 and 2007, from 11.62 billion boe to 10.78 billion boe, but CEO Dave O’Reilly said the company wants to do more to improve its project management.
“We are focused on execution as a top priority for 2008 and 2009,” O’Reilly told financial analysts Tuesday in New York. “This entails excelling at operational performance, executing our capital projects well and effectively managing costs.” He also alluded to investor fears about some of the more volatile oil and gas regions around the world and noted that Chevron had “a strong and geographically diverse portfolio to mitigate geopolitical risk.”
George Kirkland, executive vice president for the global upstream and gas unit, detailed Chevron’s exploration successes in the past five years and expectations going forward. Each year from 2002 through 2007, he said, Chevron’s exploration program has added an average of 1 billion boe to its resource base. The 2007 success rate for exploration wells was down slightly, to 41%, but on par with an average of 42% for the past six years. Kirkland also cited a recent report by energy consultant Wood Mackenzie that cited Chevron as the leader among its peers in exploration results from 2002 to 2006.
“Not only is our exploration success feeding our strong queue of major capital projects, it is also building the foundation for long-term reserves replacement as the discovered resources move to proved reserves,” Kirkland noted.
Chevron estimated that it now has more than 140 Tcf of equity natural gas resources, with an estimated 35 Tcf in the Americas. By 2020 estimated gas production is expected to inch up, accounting for about 8% more of its total net output. To build its gas business Chevron plans to commercialize its equity resource base with more than 10 gas projects, including a global portfolio of liquefied natural gas supply. Construction also is progressing on the producer’s first gas-to-liquids plant, and it also plans to build its midstream capabilities, Kirkland said. In the Piceance Basin, he said, Chevron last year began its development of tight gas resources.
Key North American exploration activities this year include the deepwater GOM, exploration wells in White Hills, AK, and appraisal wells in Ells River, Canada.
Chevron is managing its costs with “effective contracting,” improved technology and standardized materials and designs, but estimated capital spending still will jump about 15% this year, said CFO Steve Crowe. The company has budgeted $22.9 billion for capital spending in 2008, which is up from $20 billion in 2007 (ExxonMobil Corp. plans to spend $25 billion, up from $21 billion; Royal Dutch Shell and BP plc each plan to spend about $22 billion; ConocoPhillips has set a $15.3 billion budget).
©Copyright 2008Intelligence 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 © 2577-9877 | ISSN © 1532-1266 |