press release

Chevron Press Release - Chevron Announces $6 Billion Capital Spending Program for 2001

SAN FRANCISCO, Jan. 18, 2001 -- Chevron Corp. today announced a $6 billion capital and exploratory spending program for 2001. The company plans to invest $3.7 billion, or 62 percent of its total spending, in worldwide exploration and production, with $1.2 billion of that expended in the United States.

In worldwide refining, marketing and transportation, Chevron plans to invest about $1.4 billion, including about $500 million for transportation, primarily for investments in international pipeline projects to support expanded upstream production. Refining and marketing investments in the United States will total about $600 million. Investments in power and natural gas facilities and distribution, and in technology, will be approximately $650 million. Investments in chemicals will be approximately $250 million.

"Chevron's 2001 capital program reflects our continued long-term strategy to grow our worldwide upstream segment profitably, while strengthening our competitive position in refining and marketing and selectively growing the chemicals sector of the business," said Chairman and CEO Dave O'Reilly. "The 2001 capital and exploratory program is an increase of approximately 16 percent over our 2000 program. This increase signifies our continued confidence in the company's growth potential and our commitment to improve the return on capital investments through our focus on capital stewardship -- the organization's ability to better select and execute capital projects.

"The world needs energy to grow. I'm confident this capital and exploratory program, together with our superior skills and execution, will help us perform the critical mission of providing energy for the future," said O'Reilly.

Production volumes will continue to grow in 2001. Worldwide, Chevron continues to target 4 to 4.5 percent annual barrels of oil equivalent volume growth from its 1999 levels. In the United States, development drilling in mature basins will largely offset production declines and should help meet the strong demand for North American natural gas. In addition, Chevron's third Gulf of Mexico deepwater development project, Typhoon, is on schedule for a mid-2001 start-up.

Internationally, significant volume growth in 2001 will come primarily from:

  • a full year of production at Tengiz's increased capacity of over 260,000 barrels per day (bpd);
  • completion of the Kuito Phase 1C and the North Nemba projects in Angola;
  • increased production from Gbokoda/Dibi fields in Nigeria;
  • increased production in the Loma Negra complex and other areas in Argentina acquired in 1999;
  • continued development of the Benchamas and Tantawan fields in the Gulf of Thailand, also acquired in 1999.

The worldwide upstream program includes significant longer-term growth projects in:

  • Kazakhstan, where Tengizchevroil's next planned expansion will increase production capacity to 370,000 bpd. In addition, the Caspian Pipeline Consortium (CPC) has completed laying new pipe to connect the Tengiz Field to the Russian Black Sea port of Novorossiysk. The 935-mile pipeline project is expected to be operational by mid-2001 with an initial capacity of 560,000 bpd, and it will support increased production while reducing transportation costs for Tengizchevroil.
  • West Africa, where development of Block 0 and the deepwater Block 14 in Angola will continue. In addition, Chevron will begin engineering on a major gas-to-liquids project in Nigeria to further reduce flaring of associated natural gas by converting it to clean petroleum fuels.
  • Chad, where development of the Doba Field and the associated export pipeline through neighboring Cameroon will begin in 2001. (Chevron holds a 25 percent interest.)
  • Canada, where the Athabasca Oil Sands Project (in which Chevron holds a 20 percent interest) is on track for start-up in late 2002.

"Our significant investment in the upstream segment is well aligned with our strategy of capital stewardship," said Vice Chairman Dick Matzke. "We are excited about our exploration position worldwide, and we've continued to build a quality exploration portfolio that will contribute to our long-term growth.

"Near-term growth will be fueled by projects such as the CPC pipeline completion, Athabasca Oil Sands, Chad's Doba Field and continuing development of fields in Nigeria, Angola, South America and Thailand," he said. "Chevron will focus on improving its capabilities on project selection, capture and execution. Our objective is to be the best in class in these critical areas."

The capital program also includes investments in Chevron's high-quality exploration portfolio, including:

  • Exploratory drilling programs in Angola, Brazil, Azerbaijan, Norway and deepwater Gulf of Mexico. Exploratory drilling will continue in Angola on Block 14, where past efforts have resulted in six oil discoveries to date. In Brazil, drilling will begin on two offshore blocks acquired in 2000. One well will be drilled offshore Azerbaijan, and another two wells will be drilled offshore Norway. Chevron plans to continue active exploration programs in the Gulf of Mexico shelf and deepwater.
  • Seismic work will begin on the newly acquired deepwater lease (OPL 250) in Nigeria and two additional blocks in Brazil. In addition, Chevron intends to participate in an exploration drilling program in Alaska and is funding drilling offshore Canada's east coast and in the Mackenzie Delta.

In worldwide refining and marketing, Chevron plans to invest about $900 million in 2001. Refining and marketing investments in the United States will total about $600 million. These expenditures will increase Chevron's retail volume and convenience store revenue as well as streamline its distribution channels to improve margins. Chevron also will continue to make investments to improve safety, reliability and profitability in its refining segment. The remaining investments will mostly be through Chevron's 50 percent share of Caltex Corp., which operates in Asia, Africa and the Middle East.

Spending-plan figures do not include the acquisition cost of Chevron's previously announced purchase of an additional 5 percent equity in the Tengizchevroil project in Kazakhstan. This purchase closed Jan. 10, 2001.

The total spending plans are for Chevron as a stand-alone entity and do not reflect the impact of the pending merger with Texaco Inc.

Updated: January 2001