Chevron Corp. has launched a capital and exploration program of $22.8 billion for 2009, which closely mirrors the spending levels of a year ago. Three-quarters of the spending is slated for the upstream, including several prospects in the deepwater Gulf of Mexico (GOM), the major said Thursday.
Nearly $17.5 billion of the spending is targeted for upstream natural gas and oil projects worldwide. The rest of the budget mostly focuses on downstream operations. Included in the 2009 program is $1.8 billion of spending by Chevron’s affiliates, which do not require cash outlays by the company’s consolidated companies.
“Much of our 2009 spending continues to be on large, multiyear projects aimed at increasing energy supplies to meet global demand and also improving operating efficiency and reliability,” said CEO Dave O’Reilly. “About 10% of the budget is for large, one-time payments related to upstream production concessions outside the United States.”
A “significant portion” of the upstream spending relates to development projects that build on the company’s exploration results in recent years, including opportunities in the deepwater GOM, western Africa and the Gulf of Thailand. Funding also is earmarked to evaluate other prospective areas, including Northwest Australia.
Chevron’s George Kirkland, executive vice president of Upstream and Gas, said the start-ups this year are expected to include Tahiti in the Gulf of Mexico, Tombua-Landana offshore Angola and Frade offshore Brazil.
Chevron holds a 58% stake in the Tahiti project. Estimated production is expected to be about 70 MMcf/d of gas and 125,000 b/d of oil. First production is set for 3Q2009, about a year later than originally scheduled. 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 Daily GPI, June 29, 2007).
“We also anticipate significant production increases from recent start-ups at Agbami offshore Nigeria and Blind Faith in the Gulf of Mexico and from expansion activity at Tengiz in Kazakhstan,” Kirkland said.
Among the projects getting a share of Chevron’s 2009 budget are the deepwater Perdido field and the prospective Jack-St. Malo fields.
Perdido, scheduled to ramp up in 2010, is located in the Alaminos Canyon of the GOM in a foldbelt of ultra-deep waters 7,500-10,000 feet deep. Additional folds are believed to exist under the Sigsbee salt sheet that bounds the Perdido, Walker Ridge and Mississippi Fan foldbelts on three sides (see Daily GPI, March 19, 2003).
Williams in 2007 announced plans to develop the Perdido Norte Project to provide gas and oil infrastructure for units of Chevron, BP and Royal Dutch Shell (see Daily GPI, July 31, 2007).
The Jack No. 2 well, located at Walker Ridge Block 758, was completed by Chevron and its partners Devon Energy Corp. and a predecessor company of StatoilHydro in 2006 (see Daily GPI, Sept. 6, 2006). Discovered in 2004, the Jack well was completed using the deepest extended drill stem test in history in 7,000 feet of water and more than 20,000 feet under the sea floor.
The St. Malo discovery well, also in the Walker Ridge area, turned up 450 feet of net pay, followed by an appraisal well with about 400 feet of net pay.
Chevron geologists in 2005 estimated the Lower Tertiary held 3-15 billion bbl of oil. If 15 billion bbl of oil were discovered in the trend, it would increase U.S. oil reserves by 50%. Current reserves stand at about 29.2 billion bbl.
Chevron is scheduled to issue its 4Q2008 results on Friday.
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