At a Glance
At the end of 2007, worldwide net proved crude oil and natural gas reserves for consolidated operations were 7.9 billion barrels of oil-equivalent and for affiliated operations were 2.9 billion barrels. Net oil-equivalent production averaged 2.62 million barrels per day, including volumes produced from oil sands in Canada. Major producing areas include Angola, Australia, Azerbaijan, Bangladesh, Denmark, Indonesia, Kazakhstan, Nigeria, the Partitioned Neutral Zone between Kuwait and Saudi Arabia, 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.
Strategy: Grow profitably in core areas and build new legacy positions.
Upstream explores for and produces crude oil and natural gas. Chevron has holdings in some of the world's largest and most prolific basins, and we are one of the top producers wherever we operate. Our queue of new crude oil and natural gas projects is considered one of the best in the industry, and we manage one of the industry's most successful exploration programs.
A Year of Successes
Chevron has a strong crude oil and natural gas position and is a leader in working in extremely difficult environments, including ultra-deep water. During the year, we achieved a number of milestones. At the giant Tengiz Field in Kazakhstan, our 50 percent-owned affiliate Tengizchevroil (TCO) began production from two major expansion projects. When fully operational in 2008, production capacity is expected to increase from 300,000 barrels of crude oil per day to 540,000 barrels per day. In 2007, TCO produced its 1 billionth barrel of crude oil.
We also continued to move forward on major deepwater developments. At the end of the year, one of the world's largest floating production, storage and offloading vessels arrived at the Agbami Field offshore Nigeria. The vessel is capable of processing 250,000 barrels of crude oil and natural gas liquids per day and has a storage capacity of approximately 2.15 million barrels of crude oil. First production is expected by the third quarter of 2008. The Agbami Field is 68 percent-owned and operated by Chevron. In the deepwater U.S. Gulf of Mexico, production is scheduled to begin from the Blind Faith Field by mid-2008 (see Operating in Ultra-Deep Water). Although progress continued on the giant Tahiti Field, also in the Gulf, initial production was delayed until the third quarter of 2009 when rigorous testing identified metallurgical problems in part of the facility's mooring system.
In 2007, a milestone agreement was reached with the government of Thailand to extend the production period of four offshore blocks in the Gulf of Thailand to 2022. The extension facilitates Chevron and co-concessionaires' long-term plans to boost production from the blocks from approximately 740 million cubic feet per day of natural gas to 1.2 billion cubic feet per day.
We continue to enhance production from existing fields and are a leader in producing heavy oil from mature fields (see Enhancing Oil Recovery). We are sharing our expertise with our partners in the Partitioned Neutral Zone between Kuwait and Saudi Arabia, where we are the only international oil company producing under a concession from the Kingdom of Saudi Arabia. In 2007, approximately 30 Saudi Arabian and Kuwaiti employees began an extensive training program at our heavy oil operations in California to prepare them to operate one of the first heavy oil steamfloods in the Middle East.
Chevron also operates the world's largest steamflood at the Duri heavy oil field in Indonesia. The field has produced more than 2 billion barrels of crude oil since it was discovered in 1941.
Additionally, we and our partners continue to make progress in developing the Athabasca Oil Sands Project in Canada.
Exploration Success
Chevron's strong exploration program continues to feed the pipeline for future crude oil and natural gas developments. In 2007, we announced two major discoveries in Angola's deep water, where we have a number of developments under way. We also discovered crude oil offshore the Republic of the Congo. Offshore the United Kingdom, west of the Shetland Islands, we tested three appraisal wells for the Rosebank/Lochnagar discovery, a promising frontier area for exploration and development.
To advance our deepwater exploration capabilities, we have commissioned the construction of two state-of-the-art drill ships. Each will be capable of drilling to total depths of up to 40,000 feet (12,192 meters) and in water depths of up to 12,000 feet (3,658 meters). Deliveries of the drill ships are expected in 2008 and 2009.
During the year, we acquired new exploration acreage offshore Western Australia, near our giant Greater Gorgon Area natural gas holdings, and in the Gulf of Thailand.
Gas
Strategy: Commercialize our equity gas resource base while growing a high-impact global gas business.
Over the next two decades, growth in demand for natural gas is expected to outpace that for crude oil. Chevron has vast natural gas resources and is well positioned to help meet growing demand (see Transporting Natural Gas). We hold the largest natural gas resource position in Australia and have significant holdings in western Africa, Bangladesh, Indonesia, Kazakhstan, North America, South America, Thailand and the United Kingdom.
A milestone was achieved in 2007 when federal and state governments gave environmental approval to move forward with developing the Greater Gorgon Area offshore Western Australia. Plans call for building a liquefied natural gas (LNG) and domestic natural gas plant on Barrow Island and transporting the LNG to markets in Asia. Another milestone was reached when the government and partners agreed to move an LNG facility in Angola into the construction phase.
We also entered into agreements to supply additional natural gas to Trinidad and Tobago for a term of at least 11 years, to export natural gas from Colombia to Venezuela, and to develop and operate a large natural gas field in central China.
In Bangladesh, production began from the Bibiyana natural gas field, one of the largest producing gas fields in the country. By mid-2008, the first shipments of natural gas are expected to begin from Nigerian operations to the neighboring countries of Benin, Ghana and Togo. The associated 421-mile (678-kilometer) pipeline is the first regional natural gas transmission system to be developed in sub-Saharan Africa.
Chevron also is participating in the development of a gas-to-liquids (GTL) business. Through our GTL joint venture, Sasol Chevron, we are providing management, operating and technical services for an approximately 34,000-barrel-per-day GTL plant under construction in Nigeria.