press release

Chevron Press Release - Chevron Announces Record $5.9 Billion Capital Program For 1997

SAN FRANCISCO, Dec. 22, 1996 -- Chevron Corporation today announced a $5.9 billion capital and exploratory spending program for 1997, the largest in company history.

The company also said that 1996 operational earnings are expected to reach a new record. During the year, the company achieved its highest level of liquids production in 10 years, and expects that additions to proved reserves of oil and gas will exceed its production for the year.

"Our rising petroleum production and reserves represent the payoff from our growing capital investment in oil and gas projects around the world," said Chairman Ken Derr. "We have great confidence that our record capital program in 1997 will continue to yield benefits for our stockholders."

Net liquids production during 1996 should reach 1.04 million barrels per day (bpd). The biggest increase has come from the Tengiz Field in Kazakhstan, where field production is up from about 60,000 bpd at the beginning of the year to more than 160,000 bpd currently. Chevron has a 50 percent equity stake in the Tengiz joint venture, which is working to expand field capacity to at least 180,000 bpd by year-end 1997.

In addition to Tengiz, other areas which recently achieved all-time high production rates included Angola, Congo and Australia.

"I'm particularly satisfied that our additions to proved reserves exceeded oil and gas production in a year when we had such high production levels," said Derr.

Chevron plans to invest about $3.6 billion, or 60 percent of the total capital program, in worldwide exploration and production. Consistent with the company's ongoing strategy to grow its iInternational upstream business, $2.3 billion of these expenditures, up about 20 percent from 1996, will be outside the United States.

However, excellent opportunities also exist in the United States, and the company will invest about $1.3 billion, in U.S. exploration and production, up 15 percent from 1996.

The worldwide exploration and production program includes major projects in:

  • the U.S. Gulf of Mexico, following highly successful lease acquisitions and promising drilling results. Chevron is strongly positioned to expand in deep water. The recently announced Genesis project, featuring a production platform in water a half-mile deep, will be a stepping stone for Chevron's aggressive Gulf exploration program.
  • Kazakhstan, where development of the Tengiz field will continue in parallel with construction of a pipeline for export of Tengiz crude. Chevron signed an agreement Dec. 6 for the company to acquire a 15 percent stake in the Caspian Pipeline Consortium.
  • the U.K. North Sea, where the Britannia field is scheduled to come onstream in 1998. Production is expected to peak in 1999 at 740 million cubic feet of gas and 70,000 bpd of condensate. Chevron's equity interest is just over 30 percent.
  • Canada, where development of the large Hibernia project offshore Newfoundland is ahead of schedule. First oil production is expected in late 1997.

For worldwide refining, marketing and transportation, Chevron plans to invest about $1.4 billion. About $600 million will be spent in the United States, mainly for Chevron's "Customer Driven" marketing strategies, such as the McDonald's alliance.

"Our refineries recently completed a major investment program to manufacture cleaner burning fuels," Derr said. "The challenge now is to find ways to improve refining profitability while minimizing capital investment, for instance, through increasing our focus on operating reliability."

Chevron refining, marketing and transportation investment outside the United States will be about $800 million, approximately equal to 1996 spending. These expenditures will fund continued expansion by Caltex, Chevron's 50-percent-owned affiliate that operates in the Eastern Hemisphere. Over two thirds of Caltex investments will finance retail market projects, as Caltex seeks to build aggressively on strong positions in rapidly growing Pacific Rim markets.

Chevron plans to invest almost $700 million in the worldwide chemicals business in 1997, up about 30 percent from 1996.

"Our increased investment reflects our belief that the chemicals business, over the long term, is a very attractive business. Our chemicals company is one of the most cost competitive in its core products, and we have the expertise and technology to pursue opportunities for growth," Derr said.

Expenditures in 1997 will include a paraxylene expansion at the Pascagoula refinery and a lubricating oil and fuel additives manufacturing plant in Singapore. Both projects are scheduled for startup in 1998. The company is also evaluating other attractive international projects.

Updated: December 1996