Chevron 2010 Annual Report Download - page 26

24 Chevron Corporation 2010 Supplement to the Annual Report
Upstream Africa
Bonga SW/Aparo The Aparo Field in OML 132 and OML 140 and
the third-party-owned Bonga SW Field in OML 118 share a common
geological structure and are planned to be developed jointly. The
geological structure lies 70 miles (113 km) off the coast of the
western Niger Delta region in 4,300 feet (1,311 m) of water. The
proposed development plan involves subsea wells tied back to an
FPSO. Chevron is expected to have an approximate 20 percent
nonoperated working interest in the unit. The project was delayed
in 2009 in order to secure stakeholder alignment on scope. During
2010, partners extended a pre-unitization agreement. A final unit-
ization agreement will be signed in advance of a final investment
decision. Subsurface and surface facility studies are expected to be
completed in second quarter 2011. The project scope is expected to
be finalized by third quarter 2011, prior to entering FEED. At the
end of 2010, no proved reserves were recognized for this project.
Nsiko Chevron operates and holds a 95 percent interest in the
Nsiko discovery in OML 140. This discovery 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 acti-
vities and FEED are expected to begin once commercial terms are
resolved and further exploration drilling is completed. At the end of
2010, proved reserves had not been recognized for this project.
Usan Chevron holds a 30 percent nonoperated working interest
in this development project in OML 138, which lies in 2,461 feet
(750 m) of water, 62 miles (100 km) off the coast of the eastern
Niger Delta region. The development plan involves subsea wells
producing to an FPSO. During 2010, development drilling and
construction of the FPSO continued. The FPSO is expected to
depart from the fabrication site in second quarter 2011. Maximum
total daily production of 180,000 barrels of crude oil is anticipated
within one year of start-up, which is expected in 2012. The total
costs for the project are estimated at $8.4 billion. The PSC expires
in 2023. Proved reserves have been recognized for this project.
Exploration Chevron had no exploratory drilling activity in Nigeria
in 2010. Exploration wells are scheduled to be drilled in third quar-
ter 2011 in the Uge North prospect in Oil Prospecting License (OPL)
214 and the Owowo area in OPL 223. The company has nonoper-
ated working interests of 20 percent and 27 percent in OPL 214
and OPL 223, respectively. The company’s interest in OPL 247
was relinquished at year-end 2010. Proved reserves had not been
recognized for these exploration activities at the end of 2010.
Natural Gas Commercialization
Escravos Gas Project (EGP) Phase 3A Construction on the
Chevron-operated and 40 percent-owned EGP Phase 3A expansion
was completed in 2009, and first 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 gas sales to the domestic market of 180 million cubic feet and
export sales of 8,000 barrels of LPG and condensate. As a result of
the expansion, the Escravos Gas 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 infrastruc-
ture 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.
EGP Phase 3B This Chevron-operated and 40 percent-owned
development in Escravos is expected to be completed in 2013.
EGP Phase 3B is a continuation of the company’s Western Delta
Gas Development Program, focused on eliminating routine flaring
of natural gas that is associated with the production of crude oil.
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 the
Meren, Parabe, Malu, Isan, Opolo, Ewan, Tapa and Delta fields and
transport it to the Escravos Gas Plant for processing and sale.
Construction of the pipelines and modifications to the production
platforms continued through 2010. The engineering, procurement,
construction and installation contract for the gas gathering and
compression platform is expected to be signed in second quarter
2011. Total capital costs for the project are estimated to be $2.0
billion. Proved reserves have been recognized for the project.
Gas Supply Expansion Project The Chevron-operated and 40
percent-owned 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. The project scope includes
facilities required to develop the Sonam natural gas field in the
Escravos area as well as expansion of the Escravos Gas Plant to
include a third gas processing train. A final investment decision is
expected in third quarter 2011. At the end of 2010, proved reserves
associated with the project had not been recognized.
EGTL 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 expansion. Engineering, procurement and offsite
fabrication are complete. Work on the project was approximately
70 percent complete at the end of 2010, with all large modules
and equipment greater than 50 metric tons installed on their
foundations. Chevron is the operator and has a 75 percent interest
in the plant, which is scheduled for start-up in 2013. The estimated
cost of the project is $8.4 billion.
Olokola LNG Project Chevron has a 19.5 percent interest in the
OKLNG Free Zone Enterprise (OKLNG) affiliate, which will operate
the Olokola LNG Project. OKLNG plans to build a multitrain natural-
gas-liquefaction facility and marine terminal located northwest of
Escravos. As of early 2011, the timing of a final investment decision
was uncertain. At the end of 2010, proved reserves associated with
this project had not been recognized.
Onshore Asset Gas Management (OAGM) Chevron operates
and holds a 40 percent interest in six fields collectively referred
to as the Onshore Area. In 2003, civil unrest in the area resulted
in vandalism of the compression infrastructure. The OAGM project
is designed to restore these facilities and supply 125 million cubic
feet of natural gas per day to the Nigerian domestic gas market.
Two onsite construction contracts were awarded in third quarter
2010. Construction activities are ongoing, with start-up scheduled
for 2012.