Chevron has extensive oil and gas exploration and production operations around the world. In 2008, we produced 2.53 million barrels per day of net oil-equivalent. Our exploration areas of focus in 2008 were the deepwater regions of West Africa, the U.S. Gulf of Mexico, offshore northwest Australia and the Gulf of Thailand.
We are the largest private producer of oil in Kazakhstan and the top oil and gas producer in Thailand. We produce nearly half of the crude oil in Indonesia. In Australia, Chevron is the largest holder of undeveloped natural gas resources. We are among the largest holders of deepwater acreage in Nigeria and hold the most leases in the combined shelf and deepwater Gulf of Mexico.
We are working aggressively to bring our oil and gas discoveries to market. We accomplished nine major project startups in 2008. Looking ahead, our major capital projects are strategically located in regions with some of the greatest growth potential in the world.
Chevron Partners for Growth in the Caspian
In the Caspian region, the cornerstone of Chevron's growth plans is the expansion of the Tengiz oil field. Chevron holds a 50 percent interest in Tengizchevroil (TCO), which in 2008 completed the Tengiz Sour Gas Injection and Second Generation Plant. These projects will increase TCO's crude oil production capacity to 540,000 barrels per day. Chevron also holds a 20 percent stake in Karachaganak, Kazakhstan's second-largest producing petroleum reserve. And we are the largest (15 percent) private shareholder in the Caspian Pipeline Consortium pipeline, which provides a critical export route for oil from TCO and Karachaganak.
Chevron has a 10.3 percent interest in the Azerbaijan International Operating Company (AIOC), which produces and develops offshore crude oil reserves in the Caspian Sea from the Azeri-Chirag-Gunashli project. In 2008, AIOC had a total average daily production of 689,000 barrels (28,000 net). An expansion project to develop the deepwater Gunashli sector began production in second quarter 2008. Chevron is also a partner in the Baku-Tbilisi-Ceyhan pipeline, which transports oil from landlocked Caspian oil fields to Mediterranean deepwater port facilities at Ceyhan, Turkey.
Asia-Pacific Is Rich With Opportunities
Faced with the challenge of meeting Asia's growing energy needs, Chevron is well positioned in the region. We have a 40-year history of successfully operating Australia's largest onshore crude oil field. We are leading the development of the Gorgon Project — a liquefied natural gas (LNG) and domestic natural gas joint venture based in the Greater Gorgon gas fields off the coast of northwest Australia.
Gorgon is one of the largest and most complex projects we have ever undertaken, and it is Australia's largest resource project. Chevron is the operator and the largest stakeholder. The development plan calls for a three-train, 15 million-metric-ton-per-year LNG facility and domestic natural gas plant on Barrow Island. A final investment decision was announced in September 2009 after obtaining government environmental approvals.
In early 2008, Chevron announced plans to develop an LNG and domestic gas project associated with its wholly owned Wheatstone natural gas discovery. The facility is expected to be a multitrain development with a separate but co-located domestic natural gas plant. Front-end engineering and design is due to begin in the second half of 2009. Chevron also is a partner in the North West Shelf Venture in Australia, where a fifth LNG train was added in 2008.
Elsewhere in the Asia-Pacific region, Chevron operates more than 190 platforms in the Gulf of Thailand. The 69.8 percent-owned and operated Platong Gas II project received final investment decision in 2008 and is designed for a total gas processing capacity of 420 million cubic feet per day.
In Indonesia, we are pursuing large deepwater natural gas developments and expanding the Duri Field, already one of the largest steamflood projects in the world. The first expansion, North Duri Area 12, started up in November 2008. In China, we became the operator for the Chuandongbei natural gas development in 2008. And our Bibiyana natural gas field, which started up in 2007, is one of the most significant gas field discoveries in Bangladesh.
Chevron Grows Along With Africa and Latin America
Production from Chevron projects in West Africa and southern Africa continues to ramp up. We expect production to grow significantly over the next several years as our deepwater and LNG projects in Angola and Nigeria deliver results.
In Angola, we are continuing our major development program to significantly increase production of the offshore Benguela Belize–Lobito Tomboco project. At 1,680 feet (512 m), the project's drilling and production platform is among the world's tallest man-made structures. In December 2008, the tower and topside modules for the Tombua-Landana Field were installed in 1,200 feet (366 meters) of water some 50 miles (80 km) off the coast of Angola. Construction also began in early 2008 on the country's first LNG plant. The 5.2 million-metric-ton-per-year plant is expected to start up in 2012. The Takula Gas Processing Platform startup occurred in December 2008 and work continues on the Cabinda Gas Plant with startup scheduled for the second half of 2009.
In Nigeria, the Agbami project, a subsea development with wells tied back to a floating production, storage and offloading vessel, achieved first oil in July 2008, and by early 2009, production was averaging 170,000 barrels per day. Peak production of approximately 250,000 barrels per day is anticipated by the end of 2009. Other planned developments offshore Nigeria include the Usan project, the Nsiko discovery, and the Aparo and Bonga SW fields. Construction continued in 2008 on the Chevron-operated Escravos Gas Plant Phase 3A expansion and a gas-to-liquids facility in Escravos.
In Latin America, Chevron has interests in developments in Argentina, Brazil, Colombia, Trinidad and Tobago, and Venezuela. We are expanding our work in Brazil, where over the past few years Chevron has invested significant resources developing the Frade Field. Frade is among the largest deepwater heavy-oil projects in the world. First production at Frade was announced in June 2009.
Chevron participates in both onshore and offshore production projects in Venezuela, located in different parts of the country, including the planned development of the country's first LNG train. Our presence in Trinidad and Tobago includes a 50 percent nonoperated interest in four blocks in the East Coast Marine Area, which includes the Dolphin and Dolphin Deep natural gas fields and the Starfish discovery. In Colombia, Chevron produces enough natural gas to meet approximately 60 percent of the nation's domestic demand.
Maximizing Mature Resources and Creating New Opportunities
In North America, Chevron continues to maintain strong production in mature fields while developing both our deepwater Gulf of Mexico and onshore midcontinent holdings. These strategies made us the third-largest producer of hydrocarbons in the United States in 2008 and a major producer and innovator in Canada.
Chevron's U.S. assets are anchored by producing fields concentrated in the Gulf of Mexico, California, Louisiana, Texas, New Mexico, the Rocky Mountains and Alaska. Chevron is one of the leading producers of crude oil and natural gas and the largest leaseholder in the Gulf of Mexico. Production of crude oil and natural gas from the Blind Faith development in the deepwater Gulf of Mexico began in the fourth quarter of 2008. The Tahiti field, the deepest producing field in the Gulf of Mexico, achieved first oil in May 2009. The Perdido project is expected to begin production in 2010. Operating primarily in the San Joaquin Valley, Chevron again ranked No.1 in oil-equivalent production in California in 2008, and we are the second-largest hydrocarbon producer in the Permian Basin of West Texas. In Alaska, the company operates 10 platforms and several onshore and offshore oil and gas producing fields in the Cook Inlet Basin and holds interests on the North Slope.
In Canada, most of our crude oil production comes from the Hibernia Field offshore Newfoundland. Chevron also continues to pursue other opportunities in the seas offshore eastern Canada and in Canada's western Arctic. We are a partner in the Athabasca Oil Sands expansion project, which is expected to increase bitumen capacity to more than 255,000 barrels per day in late 2010. Oil sands production at Athabasca is considered a mining operation rather than an oil and gas operation under the rules of the U.S. Securities and Exchange Commission for disclosures regarding 2008 and prior periods. Therefore the oil sands reserves are not included in the company's reporting of proved oil and gas reserves. At the 60 percent-owned and operated Ells River oil sands project, the company completed a 63-well appraisal program as well as a small seismic program in 2008. In June, 2009, Chevron placed the Ells River project on hold.
Chevron is the only "supermajor" energy company with a continuous upstream presence in the Kingdom of Saudi Arabia spanning more than seven decades. On behalf of the kingdom, we conduct exploration and production activities in the onshore Partitioned Neutral Zone, where in 2008, 87 producing wells were drilled, bringing the year-end number of active producing wells to 976. Based on the success of the first phase of a steamflood project, a second-phase steamflood pilot project is on schedule, with first steam injection announced in June 2009.
In Europe, Chevron has a variety of producing operations and strong exploration interests in the West of Shetland Basin, the Norwegian Barents Sea and Greenland. Chevron operations in the North Sea have a track record of technological innovation. The Captain Field was one of the first North Sea fields to employ horizontal drilling. Chevron is joint operator of the Britannia Field, which supplies a significant percentage of the United Kingdom's natural gas demand. Two Britannia satellite fields — Brodgar and Callanish — were brought on production in 2008.
Attending to the Base Business
Chevron could not reach its production levels without focusing resources on maximizing the potential of mature reservoirs. The company is managing decline rates in existing fields with well workovers, artificial-lift techniques, facilities and equipment improvements, enhanced-recovery methods such as water and CO2 injection, and drilling.
For example, in the California fields, where heavy oil makes up approximately 84 percent of the crude oil production, we focus steamflooding in the recovery of these reserves.
Chevron plans to continue major initiatives to improve operating efficiencies, reduce base production decline and lower costs.
Updated: July 2009