A Review of the Nigerian Energy Industry

Chevron plans $39.8bn spend in 2014

Chevron-logo12 December 2013, News Wires – US supermajor Chevron plans to spend nearly $40 billion in 2014 as it closes in on start-ups major liquefied natural gas projects in Australia and continues to explore areas in North America and Africa.

About 90% of that sum, or $35.8 billion, will go towards upstream oil and gas exploration and production, with just 8% set aside for downstream businesses.

Chevron’s international upstream business will command about $27.9 billion in investments while about $7.9 billion will be dedicated to upstream activities in the US.

About 30% of the upstream capital will go towards “highly profitable development wells and other projects associated with current producing assets”. The base programme also includes an increase in activity across several producing regions of North America, as well as in Thailand and Indonesia.

The spending plan is about $2 billion less than the $42 billion the company splashed this year. Investments in 2013 included about $4 billion on major resource acquisitions that were not included in the company’s original budget.

Chief executive John Watson said 2013 would likely be a “relative peak for investments”.

However, 2014 will be the “peak year” for spending on the Gorgon and Wheatstone LNG projects in Australia, Watson said.

Gorgon, which has been under construction for four years, is nearly 75% complete. Chevron estimates the ultimate cost of the project to come in at around, with first gas planned for the middle of 2015.

“Gorgon project economics are attractive,” said vice chairman George Kirkland. “We continue to make steady progress against key project milestones and are applying lessons learnt to our Wheatstone development which is almost 25% complete.”

Gorgon and Wheatstone, two of Chevron’s “most important future legacy assets”, will account for about 400,000 barrels per day of net production at full capacity.

In the US, and elsewhere, development of unconventional resources also figures heavily into Chevron’s plans for 2014. Major capital investments are planned in the Permian basin of west Texas, in Canada’s Duvernay shale and in the Vaca Muerta shale in Argentina.

Chevron is “steadily increasing activity levels” in all of those plays, Kirkland said.

“We are very pleased with our global unconventional acreage position,” he added.

In the Gulf of Mexico, Chevron is eyeing start-up of the Jack/St Malo development in 2014.

The company also confirmed previous reports by Upstream that start-up at the Big Foot tension-leg platform development would be delayed from an expected start-up of 2014.

Tow-away from Kiewit Offshore’s yard in Ingleside, Texas, is expected to occur in the third quarter of 2014, with start-up at the project now set for the second quarter of 2015, Chevron said.

Chevron will spend $3.2 billion on global exploration, including initial appraisals of new acreage acquired in places like Australia, the Kurdistan region of Iraq and Morocco.

“The program also supports continued exploration and appraisal activity in Western Australia, the Gulf of Mexico, West Africa, and in several shale gas regions around the world,” Chevron said.

The supermajor is also planning further development of the Usan and Agbami deep-water fields in Nigeria, the Mafumeira Sul field in Angola and Moho Nord in the Republic of the Congo.

– Upstream

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