Exploration and Production Strategy: Grow profitably in core areas and build new legacy positions.
Our upstream assets continue to provide strong opportunities for future growth. In 2012, net oil-equivalent production averaged 2.61 million barrels per day, and we led our industry peers in earnings and cash flow per barrel and return on capital employed. We are on track to reach our production goal of 3.3 million barrels per day by 2017 largely through the major capital projects we currently are developing. We hold exploration acreage in some of the world's most promising basins, and our exploration program continues to discover new resources.
Gas and Midstream Strategy: Commercialize our equity gas resource base while growing a high-impact global gas business.
Natural gas is expected to be a cornerstone of our future growth. Overall, we have approximately 160 trillion cubic feet of unrisked natural gas resources. Over the next five years, we expect to begin deliveries of liquefied natural gas (LNG) from four major capital projects: Gorgon and Wheatstone offshore Western Australia and projects in Angola and Indonesia. We also have shale gas positions in the United States in the Marcellus Shale in Pennsylvania, the Permian Basin in New Mexico and Texas, and in Argentina, Canada, China, Lithuania, Poland and Romania.
Production Operations
In our existing producing operations, we are focused on operating safely, reducing decline rates and improving reliability. During the year, we celebrated two milestones: reaching 4 billion barrels of crude oil production from Block 0 offshore Angola and 2 billion barrels from our 50 percent-owned Tengizchevroil affiliate in Kazakhstan.
The innovative use of proprietary technologies contributes greatly to our production performance. Our i-field® program is one example. It uses information technology to manage reservoirs, wells and facilities. Since 2002, we have realized hundreds of millions of dollars in cost savings and significantly improved output. First applied in producing properties in the United States—California, Texas and the Gulf of Mexico—we now are taking i-field global, enabling us to monitor assets on six continents in real time. In 2012, we were selected by U.S. News & World Report as one of America's Most Connected Companies for our global i-field operations.
Chevron is an industry leader in steamflooding technology, and we continue to boost recovery rates from selected mature heavy-oil reservoirs. Two of our largest steamflood operations are in the Kern River Field in California and the Duri Field in Indonesia. We are piloting the world's first commercial-scale carbonate steamflood at the Wafra Field in the Partitioned Zone between Kuwait and Saudi Arabia. We also are using enhanced recovery technologies to boost production from our holdings in the Permian Basin in New Mexico and Texas.
Major Capital Projects
Our strong queue of major capital projects puts us on track to meet our 2017 production goal. Over the next five years, we expect to begin production from 50 major capital projects, each representing a Chevron investment of more than $250 million and 16 exceeding $1 billion. Since 2011, we have added approximately 16 million net acres to our exploration portfolio, giving us further opportunities for organic growth.
In the United States, we believe we are especially well positioned in the deepwater Gulf of Mexico. During the year, we achieved startup at Tahiti 2, an ambitious $2.3 billion waterflood project to extend peak production and increase recovery from the Tahiti Field. Tahiti 2 represents the industry's deepest water-injection project in history. In 2012, production also began from Caesar/Tonga. Another pioneering venture, the $7.5 billion Jack/St. Malo development, will utilize the world's largest steel semisubmersible hull for the production platform, which is currently under construction. We also are developing two other major capital projects in the Gulf of Mexico: Big Foot, $4.1 billion, and Tubular Bells, $2.3 billion.
In Nigeria, we began production from two multibillion-dollar deepwater projects. The $1.9 billion Agbami 2 project is expected to sustain a maximum total daily liquids production rate of 250,000 barrels and extend the period of peak production from the giant Agbami deepwater field by an expected six years. The nearby Usan deepwater field also began production in 2012.
Our largest investments to date are in two liquefied natural gas (LNG) projects offshore Western Australia: the $52 billion Gorgon Project and the $29 billion Wheatstone Project. Gorgon is expected to start up in late 2014, and first LNG cargo is anticipated in early 2015. The development will include a 75-mile (121-kilometer) seafloor pipeline that will carry natural gas from the Gorgon fields to processing facilities on Barrow Island. Under construction are a three-train, 15.6 million-metric-ton-per-year LNG plant and a domestic gas plant. At the end of the year, the first LNG train was being installed. The Gorgon Project also will include the world's largest commercial system to inject carbon dioxide into underground reservoirs.
First LNG from Wheatstone is expected in 2016. The first phase of the project will consist of two LNG processing trains with a combined design capacity of 8.9 million metric tons per year, a domestic gas plant and associated offshore infrastructure. The onshore facilities will be located near Onslow in the Pilbara region. More than 80 percent of our equity offtake is presently covered under binding long-term agreements.
At year-end 2012, we had made a total of 19 natural gas discoveries in Western Australia's Carnarvon Basin since mid-2009. An additional discovery was announced in early 2013. These discoveries are expected to provide expansion opportunities for our Gorgon and Wheatstone LNG projects.
In 2013, we expect the first shipment of LNG from our interest in a 5.2 million-metric-ton-per-year plant in Soyo, Angola. The plant will enable us to commercialize natural gas resources from offshore fields.
In early 2013, we completed transactions that are expected to strengthen our natural gas and LNG positions. In Canada, we acquired a 50 percent-owned and operated interest in the Kitimat LNG project and the proposed Pacific Trail Pipeline, and a 50 percent nonoperated working interest in approximately 644,000 acres (2,606 square kilometers) of petroleum and natural gas rights in the Horn River and Liard Basins in British Columbia. Kitimat, which is in the front-end engineering and design phase, is expected to export 10 million metric tons per year of LNG.
We have a number of other natural gas projects that we are developing. In China, construction of the initial gas processing plant at the Chuandongbei Project continued in 2012 and is targeted for mechanical completion at the end of 2013. Also in 2012, site preparation began for the second processing plant. The project's planned maximum total daily natural gas production is 558 million cubic feet. The total project cost is estimated to be $6.4 billion. In 2012, final investment decision was reached on an expansion project at the Bibiyana natural gas field in Bangladesh. The project includes a gas plant expansion, additional development wells and an enhanced liquids recovery unit. It is expected to increase the total maximum daily production by more than 300 million cubic feet of natural gas and 4,000 barrels of condensate. First production is expected in 2014.
At our 50 percent-owned Tengizchevroil affiliate in Kazakhstan, front-end engineering and design activities were initiated in 2012 for three projects. The Future Growth Project is designed to increase total daily production by 250,000 to 300,000 barrels of oil-equivalent and to increase the ultimate recovery of the reservoir. The project also would expand the utilization of sour gas injection technology proven in existing operations. The Wellhead Pressure Management Project is designed to maintain production capacity and extend the production plateau from existing assets. The Capacity and Reliability Project is designed to reduce facility bottlenecks and increase plant efficiency and reliability. Final investment decisions for these projects are planned for late 2013.
We also are part of the Caspian Pipeline Consortium, which has a $5.4 billion expansion under way for the Caspian Pipeline that carries crude oil from the Tengiz Field in Kazakhstan to a dedicated terminal on the Black Sea. The three-phase expansion is expected to almost double current capacity, eventually reaching 1.4 million barrels per day by 2016. The pipeline is expected to enable us to accommodate future growth from the Tengiz and Karachaganak fields.
During the year, we entered front-end engineering and design on the Rosebank Field in the West of Shetland region offshore the United Kingdom. The area holds a significant portion of the U.K.'s undeveloped crude oil and natural gas resources.
We also announced plans to proceed with the development of the Lianzi Field located in a unitized offshore zone between the Republic of the Congo and the Republic of Angola. Lianzi will be developed via a tieback to our existing Benguela Belize-Lobito Tomboco Platform located offshore Angola. Also in Angola, we sanctioned Mafumeira Sul, the second stage of a deepwater project that is expected to achieve maximum total daily production of 110,000 barrels of crude oil and 10,000 barrels of liquefied petroleum gas. First production is expected in 2015. In March 2013, we announced final investment decision for the $10 billion Moho Nord development offshore the Republic of the Congo. Located in water depths ranging from 1,500 to 4,000 feet (450-1,200 meters), it is the country's largest crude oil and natural gas development. Peak production is expected in 2017 at the rate of 140,000 barrels of crude oil per day.
Exploration
Our exploration program has added approximately 10.2 billion barrels of oil-equivalent to our resource base over the past 10 years. We hold exploration interests in some of the world's most prolific basins. In 2012, we acquired a number of new blocks. In the United States, we were the successful bidder on 43 deepwater blocks in the U.S. Gulf of Mexico, where we are one of the largest leaseholders. In Australia, we announced six discoveries in the Carnarvon Basin in 2012, bringing the total in the area to 19 since mid-2009. To further strengthen our position, we exchanged our interests in the Browse Basin for additional equity in two blocks in the Carnarvon Basin. We also acquired blocks in the Kurdistan Region of Iraq, the frontier deep water of Sierra Leone and Suriname, and in Lithuania.
In 2012, we had exploration activity in Australia's Carnarvon Basin, deepwater Liberia, deepwater Nigeria, the U.S. Gulf of Mexico and the Gulf shelf, and at our shale gas holdings in Argentina, Canada, China, Poland and the United States. In 2013, we expect to begin exploration on new shale gas acreage in Lithuania and Romania.
Beyond 2017
Looking beyond 2017, we expect our queue of projects to enable us to sustain industry-leading performance. We currently are evaluating expansion plans for many of our assets, including Gorgon, Wheatstone, and the Wafra and Tengiz fields. Our exploration portfolio also is expected to add opportunities for new production for the next decade.
Posted: April 2013