Exploration and Production
Chevron continues to develop energy resources off the northwest coast of Australia. Our strategy is to grow and commercialize our resources to create an effective natural gas business in Australia and the Asia-Pacific region.
For 2010, our net daily oil-equivalent production averaged 111,000 barrels, representing approximately 4 percent of our companywide total. That daily production comprised 159,000 barrels of crude oil and condensate (29,000 net), 29,000 barrels of liquefied petroleum gas (LPG) (5,000 net) and 2.7 billion cubic feet of natural gas (458 million net).
The Barrow Island and Thevenard Island oil fields and the North West Shelf Venture make important contributions. These operations are offshore Western Australia, about 990 miles (1,600 km) north of Perth.
North West Shelf Venture
Chevron has a 16.7 percent nonoperated working interest in the North West Shelf (NWS) Venture, which includes onshore and offshore oil and natural gas facilities and is Australia's largest resource project to date. In 2010, Chevron's net daily production from the NWS Venture averaged 25,000 barrels of crude oil and condensate, 5,000 barrels of LPG, and 456 million cubic feet of natural gas.
NWS Venture operations include offshore producing fields and extensive onshore facilities, including five liquefied natural gas (LNG) processing units and a domestic gas plant. Producing operations include the Angel, Echo Yodel, Goodwyn, North Rankin and Perseus natural gas fields and the Cossack, Hermes, Lambert and Wanaea crude oil fields.
For more than 25 years, the NWS Venture has been Western Australia's largest producer of domestic gas and currently contributes about 65 percent of the state's total production. The NWS Venture has been exporting LNG to customers in the Asia-Pacific region since 1989.
About 70 percent of the natural gas produced by the NWS Venture in 2010 was exported as LNG, primarily under long-term contract to major utilities in Japan, South Korea and China. The balance was sold to the Western Australian domestic gas market.
Progress continues on several NWS Venture projects.
The North Rankin 2 Project is designed to recover remaining low-pressure natural gas from the North Rankin and Perseus fields. A second platform is being built close to the North Rankin A platform, which will be refurbished. When complete, the two platforms are designed to be connected by a bridge and operated as a single integrated facility. The maximum total daily production is expected to be 2 billion cubic feet of natural gas and 39,000 barrels of condensate. Condensates are hydrocarbons that are in a gaseous state in a reservoir but condense into liquid as they travel up the well bore and reach the surface. Total estimated project cost is $4.7 billion, and startup is expected in 2013.
Work also continued on the NWS Oil Redevelopment Project, which is designed to replace the existing floating production, storage and offloading vessel and a portion of existing subsea infrastructure that services production from the Cossack, Hermes, Lambert and Wanaea offshore fields. A new floating production, storage and offloading vessel is expected to be completed in the second quarter of 2011. Startup of the $1.9 billion project is expected in the third quarter of 2011.
In addition, NWS Venture is developing several small gas fields in the western section of the Goodwyn reservoirs. The project is expected to begin front-end engineering and design in the second quarter of 2011.
Barrow Island and Thevenard Island
Chevron holds a 57.1 percent interest in the Barrow Island crude oil production facilities, Australia's largest and oldest onshore oil field. We operate the field safely and economically while protecting biodiversity within the Barrow Island Nature Reserve.
We also hold a 51.4 percent interest in and operate fields near Thevenard Island, 43 miles (70 km) southwest of Barrow Island. Thevenard Island provides a base for processing and storing hydrocarbons from several nearby oil fields.
In 2010, total daily production for these operations was 7,000 barrels of crude oil (4,000 net).
Greater Gorgon Area Development
The Greater Gorgon Area gas fields, between 80 and 125 miles (130 and 200 km) off the northwest coast of Western Australia, are Australia's largest known natural gas resource. Chevron has a 47.3 percent interest in and operates the Gorgon Project.
Plans for the Gorgon Project include a subsea development of the Gorgon and Jansz-Io fields, tied back to Barrow Island, where a 15 million-metric-ton-per-year LNG facility and a domestic gas plant with a capacity of 300 terajoules per day will be built. The project combines development of the two fields as one large-scale project.
Following the final investment decision, construction began in late 2009. Construction on Barrow Island continued in 2010. More than $25 billion in contracts for materials and supplies were awarded. Site clearing is well under way. The first stage of the construction village was built, and module fabrication began. In addition, progress was made on studies into the possible expansion of the project.
The project, which is Australia's largest single-resource project, is estimated to cost approximately $37 billion (AU$43 billion) for the first phase of development. Maximum total daily production from the project is expected to be 2.6 billion cubic feet of natural gas and 20,000 barrels of condensate. Expected startup is 2014.
Chevron has had success in finding new resources in the Greater Gorgon Area. In 2010, natural gas discoveries at the 50 percent-owned and operated Yellowglen and Sappho were announced.
Read more about the Gorgon Project.
Wheatstone
At our Wheatstone Project, plans call for an 8.9 million-metric-ton-per-year LNG facility and a separate domestic gas plant at the Ashburton North site, near Onslow, along the West Pilbara coast. The facilities would be fed by natural gas from the Wheatstone and Iago fields. We operate the two fields that lie between the NWS Venture area and the Greater Gorgon Area. The maximum total daily production is expected to be 1.4 billion cubic feet of natural gas and 25,000 barrels of condensate.
The project began front-end engineering and design in 2009. In March 2010, we started the environmental approvals process with the government. A nonbinding Native Title agreement was executed in December 2010 with the local indigenous people for land required to develop the project. In early 2011, key approvals were finalized on numerous agreements relating to the facilities and land sites. The final investment decision was announced in September 2011.
In 2010, Chevron announced the Clio and Acme natural gas discoveries in Block WA-205-P. Chevron has a 67 percent-owned and operated interest in these discoveries, which are expected to support expansion opportunities at the Wheatstone LNG facilities.
Browse Basin
The Browse LNG development is targeting one of Australia's largest undeveloped gas resources. The three gas fields that make up the Browse development—Brecknock, Calliance and Torosa—are in the Browse Basin, about 155 miles (250 km) off the far northwest coast of Western Australia. Chevron's nonoperated working interests range from 16.7 percent to 20 percent in these Browse Basin blocks and 24.8 percent to 50 percent in other blocks in Browse Basin.
In 2010, conceptual engineering work began in the three Browse Basin fields, and field development plans were submitted to government regulators. The final field development plan is scheduled to be submitted in mid-2011.
In the Carnarvon Basin, off the coast of Western Australia, Chevron announced a natural gas discovery at the Brederode prospect in Block WA-364-P. Chevron holds a 50 percent interest in and operates this discovery.
Marketing and Retail
Chevron markets natural gas from its Gorgon and Wheatstone projects to LNG markets in the Asia-Pacific region and to Western Australian industrial and commercial gas customers.
Gorgon Agreements
Chevron has signed five agreements with various Asian customers for delivery of about 4.7 million metric tons of LNG per year. Negotiations continued to move the remaining nonbinding Heads of Agreements to binding Sales and Purchase Agreements, which would bring combined delivery commitments to about 90 percent of Chevron's share of LNG from the Gorgon Project.
Signed agreements for Gorgon include:
Wheatstone Agreements
Chevron signed nonbinding agreements with two Asian customers in 2010 and with one Asian customer in 2009 for the delivery of about 80 percent of Chevron's net LNG production from the Wheatstone Project. The customers also agreed to acquire an interest in the Wheatstone field licenses and the initial natural gas processing facilities, contingent on a final investment decision.
Agreements were also signed in 2009 and 2010 with two companies to participate in the Wheatstone Project as combined 20 percent LNG facility owners and suppliers of natural gas for the project's first two LNG processing units. At the end of 2010, Chevron held an 80 percent interest in the initial natural gas processing facilities. In 2010, Chevron and KOGAS signed an LNG and equity agreement.
NWS Venture Agreements
Establishing long-term contracts with Japanese customers in the 1980s was the foundation for the development of the NWS Venture's LNG production and export facilities. Customers in Japan include:
- Chugoko Electric Power Company
- Toho Gas Co.
- Chubu Electric Power Company
- Kansai Electric Power Company Inc.
- Tokyo Gas Co.
- Osaka Gas Co.
- Tokyo Electric Power Company Inc.
- Kyushu Electric Power Co., Inc.
- Tohoku Electric Power Company
Caltex
Chevron holds a 50 percent interest in Caltex Australia Limited, a publicly listed company on the Australian Securities Exchange. Based in Sydney, Caltex Australia is the country's leading petroleum and convenience marketer.
The company trades under the Caltex™ brand, with wholesale, commercial and retail marketing operations in all states and territories.
Caltex Australia owns and operates two fuel refineries, one near Sydney and the other near Brisbane. These two oil refineries account for almost a third of Australia's total capacity. Caltex Australia also operates 12 storage terminals across Australia and has access to product supply at another 10 terminals.
Caltex Australia's national network comprises about 1,650 service stations, including company-owned and franchised stores, resellers, independent operators, and Caltex Woolworth's co-branded outlets. The company also sells directly to commercial and industrial customers of all sizes, including transportation, aviation and agricultural enterprises. Caltex Australia holds about a third of the market share of the major transportation fuels sold in the country.
Updated: March 2011
Cautionary Statement