Exploration and Production
In 2010, total daily production in Nigeria averaged 524,000 barrels of crude oil (237,000 net), 206 million cubic feet of natural gas (86 million net) and 5,000 barrels of liquefied petroleum gas (LPG) (2,000 net).
Through our principal subsidiary in Nigeria, Chevron Nigeria Ltd., we operate and hold a 40 percent interest in 13 concessions operated under a joint-venture arrangement with the Nigerian National Petroleum Corporation (NNPC), which owns a 60 percent interest.
Onshore and Near Offshore
Construction at the Olero Creek Flowstation project continued in 2010, with completion expected in 2013. Work to lay a new pipeline to transport natural gas from Abiteye to processing facilities at Escravos continued in 2010; completion is planned for the fourth quarter of 2011.
The Dibi Long-Term Project is designed to integrate the existing Early Production System facility, purchased in 2009, into a permanent flowstation. The project also includes partially rebuilding the Dibi facilities that were vandalized in 2003. Front-end engineering and design was completed in September 2010. A final investment decision is expected in the second quarter of 2011. Total daily production from the Early Production System averaged 32,000 barrels (10,000 net).
Shallow-water exploration continued in 2010. We evaluated 3-D seismic data from Oil Mining Leases 53 and 95. As of early 2011, work to identify deep gas prospects continued. A natural gas exploration well, Funiwa Deep, is scheduled to be drilled in the fourth quarter of 2011.
Deep Water
Chevron has interests, ranging from 18 percent to 100 percent, in 10 deepwater blocks in offshore Nigeria.
Chevron operates the Agbami Field, which lies 70 miles (113 km) off the coast of the central Niger Delta region and spans 45,000 acres (182 sq km). Discovered in 1998, the Agbami Field is at a water depth of approximately 4,800 feet (1,463 m).
Agbami is a subsea development with wells tied back to a floating production, storage and offloading vessel. A 10-well development program is expected to provide crude oil production capacity to offset production decline. Drilling began in May 2010 and is expected to continue through 2014.
Chevron also has a 30 percent nonoperated working interest in the Usan Project, in 2,461 feet (750 m) of water, 62 miles (100 km) off the coast in the eastern Niger Delta region. Development plans call for subsea wells tied into a floating production, storage and offloading vessel. Development drilling continued in 2010, and the vessel is expected to depart from its fabrication site in the second quarter of 2011. The project is expected to begin operations in 2012. Maximum total production of 180,000 barrels of crude oil per day is expected to be achieved within one year of startup. The total project cost is estimated at $8.4 billion.
The Aparo Field and the Bonga SW Field share a common geologic structure and are planned to be developed jointly. The structure lies in 4,300 feet (1,311 m) of water, 70 miles (113 km) off the coast of the western Niger Delta region. Chevron will have an approximate 20 percent nonoperated working interest in the proposed area. The project was delayed in 2009 to secure agreement among stakeholders on its scope. The scope is expected to be finalized by the third quarter of 2011, prior to entering front-end engineering and design. During 2010, partners extended a pre-unitization agreement. A final unitization agreement will be signed in advance of a final investment decision. Subsurface and surface facility studies are expected to be finished in the second quarter of 2011.
Chevron operates and holds a 95 percent interest in the Nsiko discovery, which lies in approximately 5,800 feet (1,768 m) of water, 90 miles (145 km) off the coast of the western Niger Delta region. Subsurface evaluations and field development planning were completed in 2008. Development activities and front-end engineering and design are expected to begin once further exploration drilling is completed and commercial terms are resolved.
Exploration wells are scheduled to be drilled in the third quarter of 2011 in Oil Prospecting Licenses 214 and 223. Chevron has a nonoperated interest in the two licenses of 20 percent and 27 percent, respectively.
Natural Gas
Construction on the Chevron-operated and 40 percent-owned Escravos Gas Plant (EGP) Phase 3A expansion in Escravos was completed in 2009. The first natural gas was delivered to the new facilities in June 2010. At the end of 2010, total daily input into the facility was 230 million cubic feet of natural gas, resulting in daily export gas sales to the domestic market of 180 million cubic feet, as well as export sales of 8,000 barrels of LPG and condensate. As a result of the expansion, the plant's daily processing capacity increased from 285 million to 680 million cubic feet of natural gas, and daily LPG and condensate export capacity increased from 15,000 to 58,000 barrels. The expansion also included infrastructure for offshore natural gas gathering and compression and the addition of a second processing facility to process natural gas from the Meji, Delta South, Okan and Mefa fields.
The EGP Phase 3B is also 40 percent owned and operated by Chevron. The project, expected to begin operations in 2013, is a continuation of the company's Western Delta Gas Development Program, aimed at eliminating routine flaring of natural gas associated with crude oil production. The project includes installation of a 120 million-cubic-foot-per-day natural gas gathering and compression platform near the existing Meren 1 complex, installation of approximately 75 miles (121 km) of subsea pipelines, and modifications to nine existing production platforms. The project is designed to receive natural gas from Delta fields and transport it to the Escravos Gas Plant for processing and sale. Engineering, procurement, construction and installation (EPCI) of the pipelines and production platforms continued through 2010. The EPCI contract for the gas gathering and compression platform is expected to be signed in the second quarter of 2011. Total capital costs for the project are estimated at $2 billion.
Chevron and the NNPC are developing a 33,000-barrel-per-day gas-to-liquids facility at Escravos that is designed to process 325 million cubic feet per day of natural gas from the EGP Phase 3A project. Engineering, procurement and offsite fabrication are finished. Overall project work was approximately 70 percent complete at the end of 2010 with all large modules and equipment greater than 50 metric tons installed. Chevron has a 75 percent interest in and will operate the $8.4 billion plant, which is planned to begin operations in 2013.
Chevron operates and has a 40 percent interest in the Gas Supply Expansion Project. The project is designed to deliver 215 million cubic feet of natural gas per day to the domestic gas market and produce 43,000 barrels of liquids per day. Plans call for developing the Sonam natural gas field in the Escravos area and expanding the Escravos Gas Plant to include a third gas processing unit. A final investment decision is expected in the third quarter of 2011.
Chevron has a 19.5 percent interest in the Olokola Liquefied Natural Gas Free Zone Enterprise (OKLNG) affiliate that will operate the Olokola LNG project. OKLNG plans to build a multi-unit natural gas liquefaction facility and marine terminal northwest of Escravos. As of early 2011, the timing of a final investment decision was uncertain.
Chevron operates and holds a 40 percent interest in six oil fields collectively referred to as the Onshore Area. In 2003, civil unrest in the area resulted in vandalism of compression facilities. The Onshore Asset Gas Management project is designed to restore these facilities and to supply 125 million cubic feet of natural gas to the Nigerian domestic gas market. Two onsite construction contracts were awarded in the third quarter of 2010. Construction is under way, and completion is scheduled for 2012.
Chevron is the largest shareholder in West African Gas Pipeline Company Limited, with a 36.7 percent interest. The company constructed, owns and operates the 421-mile (678-km) West African Gas Pipeline, which is designed to supply Nigerian natural gas to customers in Ghana, Benin and Togo for power generation and industrial applications. Compression facilities to increase the pipeline capacity to 170 million cubic feet of natural gas per day were completed in February 2011.
Updated March 2011
Cautionary Statement