Upstream at a Glance
At the end of 2006, worldwide net proved crude oil and natural gas reserves for consolidated operations were 8.6 billion barrels of oil-equivalent and for affiliated operations were 3 billion barrels. Production averaged 2.67 net million barrels of oil-equivalent per day, including volumes produced from oil sands and production under an operating service agreement. Major producing areas include Angola, Australia, Indonesia, Kazakhstan, Nigeria, the Partitioned Neutral Zone, Thailand, the United Kingdom, the United States and Venezuela. Major exploration areas include western Africa, Australia, Brazil, Canada, the Gulf of Thailand, the Norwegian Barents Sea, the international waters between Trinidad and Tobago and Venezuela, the U.K. Atlantic Margin, and the U.S. Gulf of Mexico.
Upstream explores for and produces crude oil and natural gas. Our strategy is to grow profitably in core areas and build new legacy positions. We have major assets in the world's most prolific regions, and we are generally among the top producers wherever we operate. We currently have more than 35 major capital projects in various stages of development, each representing an investment of $500 million or more and each located in areas of great resource potential. We also have one of the industry's leading exploration records. In 2006, we had our fifth year of successful exploration results and added more than 1 billion barrels of crude oil and natural gas resources. One leading energy consulting firm said Chevron has one of the strongest exploration portfolios in its peer group, with proven experience in pushing the boundaries of known technology.
Strong Performance
Upstream achieved a number of milestones in 2006. During the year, initial production began from Angola's deepwater Benguela and Lobito fields, part of the Benguela Belize-Lobito Tomboco (BBLT) development. By utilizing the BBLT infrastructure, production also began from the nearby Landana North reservoir, part of the Tombua-Landana development. We also realized first production from fields in Azerbaijan, Trinidad and Tobago, and the U.K. North Sea. In Kazakhstan, where the Tengizchevroil joint venture is the largest private producer, significant progress was made on the Sour Gas Injection/Second Generation Plant project. Scheduled for startup in 2007, the integrated projects are expected to increase crude oil production capacity from the Tengiz and Korolev fields from the current 300,000 barrels per day to between 460,000 and 550,000 barrels per day. During the year, we also began construction on the Tahiti development in the deepwater U.S. Gulf of Mexico and completed key components of a floating production, storage and offloading vessel for the Agbami development in Nigeria's deep water. In Canada, we approved a net additional $2 billion investment in the Athabasca Oil Sands Project, which will increase design capacity from 100,000 barrels of bitumen per day to more than 255,000 barrels per day. Chevron has a 20 percent interest.
In 2006, we committed to develop other major discoveries. Offshore Brazil, we plan to develop the Frade Field, our first oil field development in that country. Frade is expected to begin producing in early 2009. Two years after startup it is expected to reach a maximum production rate of 90,000 barrels of oil-equivalent per day. We also announced plans to develop the Great White, Silvertip and Tobago fields in the deepwater U.S. Gulf of Mexico.
Exploration Successes
Chevron has one of the most robust and successful exploration programs in the industry. The foundation for our string of discoveries is the use of proprietary technology that helps us map deepwater reservoirs with unprecedented clarity. In 2006, we announced significant crude oil discoveries in deepwater Nigeria and the U.S. Gulf of Mexico. We also made two major natural gas discoveries offshore Western Australia, both within the giant Greater Gorgon Area, which we plan to develop.
During the year, we acquired new exploration acreage in Canada, in the Norwegian Barents Sea, in the deepwater U.S. Gulf of Mexico and offshore Western Australia. We also increased our acreage in Canada's Athabasca oil sands region.
To help maintain our leading position in deepwater exploration and production, we awarded a contract for the construction of a state-of-the-art drill ship that is expected to have the most advanced drilling capabilities in the offshore drilling industry. Expected to be delivered in 2009, it will be dedicated exclusively to Chevron for a five-year period.
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Well Engineer Bobby Scott, Kern River Field, California.
Global Gas
Global Gas is focused on commercializing our large equity natural gas resource base while growing a high-impact business. Chevron operates in some of the world's leading natural gas basins and uses state-of-the-art technologies to develop the full spectrum of natural gas — from conventional pipeline gas to liquefied natural gas (LNG) to gas-to-liquids (GTL). We hold the largest natural gas resource position in Australia and have other significant natural gas holdings in western Africa, Kazakhstan, Latin America, North America and Thailand. Global Gas is highly integrated and brings together the key businesses involved in every aspect of developing natural gas — production, liquefaction, shipping, regasification, pipelines, marketing and trading, power generation, and GTL technology. Our strong integration enables us to benefit across the entire natural gas value chain.
We are moving forward to commercialize our vast natural gas holdings from the giant Greater Gorgon Area, offshore Western Australia. We plan to develop LNG projects for Gorgon, as well as projects in Angola and Nigeria, and we are evaluating opportunities in Venezuela. During the year, we delivered the first natural gas from a field offshore Trinidad and Tobago to an LNG processing facility in Point Fortin, Trinidad. The North West Shelf Venture (NWSV), offshore Western Australia, delivered China's first imported shipment of LNG under a 25-year agreement. A fifth LNG train is currently under construction to accommodate increased production from the NWSV. Chevron is an equal one-sixth partner in the venture.
Our GTL joint venture, Sasol Chevron, is providing management, operating and technical services for a 34,000-barrel-per-day GTL plant under construction in Nigeria. The company also is pursuing GTL opportunities in other countries.
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North West Shelf Venture, Western Australia; Sour Gas Injection/Second Generation Plant project, Kazakhstan.