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Chevron strikes oil at Guadalupe, Gulf of Mexico

Chevron Corporation today announced a new oil discovery at the Guadalupe prospect in the deepwater U.S. Gulf of Mexico.

The Keathley Canyon Block 10 Well No. 1 encountered significant oil pay in the Lower Tertiary Wilcox Sands. The well is located approximately 180 miles off the Louisiana coast in 3,992 feet of water and was drilled to a depth of 30,173 feet.

“The discovery further demonstrates Chevron’s exploration capabilities,” said George Kirkland, vice chairman and executive vice president, Upstream, Chevron Corporation. “Guadalupe builds on our already strong position in the deepwater U.S. Gulf of Mexico, a core focus area where we expect significant production growth over the next two years.”

“The Guadalupe discovery adds momentum to our growing business in North America,” said Jay Johnson, senior vice president, Upstream, Chevron Corporation. “Our deepwater exploration and appraisal program continues to unlock important resources in the Gulf of Mexico.”

“The company expects additional Gulf of Mexico production from the Tubular Bells and Jack/St. Malo projects by the end of the year.”

“Chevron subsidiaries are among the top producers and leaseholders in the Gulf of Mexico, averaging net daily production of 143,000 barrels of crude oil, 347 million cubic feet of natural gas, and 15,000 barrels of natural gas liquids during 2013,” said Jeff Shellebarger, president, Chevron North America Exploration and Production Company. “The company expects additional Gulf of Mexico production from the Tubular Bells and Jack/St. Malo projects by the end of the year.”

Chevron subsidiary Chevron U.S.A., Inc. began drilling the Guadalupe well in June 2014. More tests are being conducted on the discovery well and additional appraisal wells will be needed to determine the extent of the resource.

The Guadalupe well was drilled by Transocean’s Discoverer India deepwater drillship (photo).

Chevron U.S.A., Inc., with a 42.5 percent working interest in the prospect, is the operator of the Guadalupe discovery well. Guadalupe co-owners are BP Exploration & Production, Inc. (42.5 percent) and Venari Resources LLC (15 percent).

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Corpus Christi, TX – Analysis: From Big Foot to Bluto, Gulf of Mexico set for record oil supply surge

CORPUS CHRISTI, Texas
Sun Oct 27, 2013 9:10pm EDT
By Kristen Hays and Terry Wade

(Reuters) – The Gulf of Mexico, stung by the worst offshore oil spill in U.S. history in 2010 and then overshadowed by the onshore fracking boom, is on the verge of its biggest supply surge ever, adding to the American oil renaissance.

Over the next three years, the Gulf is poised to deliver a slug of more than 700,000 barrels per day of new crude, reversing a decline in production and potentially rivaling shale hot spots like Texas’s Eagle Ford formation in terms of growth.

The revival began this summer, when Royal Dutch Shell‘s (RDSa.L) 100,000 barrels per day Olympus platform was towed out to sea 130 miles south of New Orleans – the first of seven new ultra-modern systems starting up through 2016. It weighs 120,000 tons, more than 200 Boeing 777 jumbo jets.

The Gulf Of Mexico’s growth will bolster the United States’ emerging role as the world’s top oil and gas producer, a trend led by advances in hydraulic fracturing and horizontal drilling that unlock hydrocarbons from tight rock reservoirs in places like North Dakota’s Bakken and the Permian of West Texas.

Rising domestic production and the start of natural gas exports may transform the economy and realign geopolitics as U.S. reliance on foreign oil declines.

The resurgence in the Gulf is occurring even though the U.S. government imposed stringent safety and environmental rules after BP Plc‘s (BP.L) Macondo spill. Foreign countries from Brazil to Angola have also aggressively courted Big Oil to invest in developing their offshore fields. And the shale boom has diverted billions of dollars in capital onshore.

The deepwater Gulf, considered the most technically challenging offshore oil patch, remains alluring even as other areas struggle. Brazil attracted only a single bid this month for its once-touted Libra field, yet global companies still compete fiercely for the right to drill in the Gulf.

“A barrel of discovered oil in the Gulf of Mexico is difficult to beat for value anywhere else, even with the increased costs of doing business,” said Jez Averty, senior vice president of North American exploration at Norway’s Statoil (STL.OL).

Huge finds over the last decade – in what engineers call “elephant fields” that can produce for 25 years or more – are lifting growth in a basin some companies once abandoned, fearing it was drying up or its resources were beyond reach.

“This is still one of the premier oil and gas regions in the world and that’s why we’ve never left,” said Steve Thurston, vice president of Chevron Corp‘s (CVX.N) North American exploration and production division.

Even after decades of production in the Gulf, government estimates have shown that 48 billion barrels could still be recovered.

LOWER TERTIARY

The area of the Gulf of Mexico where most of the new infrastructure will start up is in an ancient geological trend in its deepest waters 200 miles or more from shore known as the Lower Tertiary, estimated to hold 15 billion barrels of crude.

Appraisals in the Gulf’s Lower Tertiary have shown fields that could have half a billion barrels or more of oil, like Exxon Mobil Corp’s (XOM.N) Hadrian, estimated to hold up to 700 million barrels, or Anadarko Petroleum Corp‘s (APC.N) Shenandoah, which tests this year showed could hold up to three times more than initial estimates of 300 million barrels.

The potential bounty of massive deposits that can produce for a quarter century or more is what keeps players coming even though a single well that bores tens of thousands of feet through thick salt and rock to strike oil – or a dry hole – can cost $130 million or more.

By contrast, an onshore well costs about $8 million to drill – but may only produce a trickle of oil for a few years.

Chevron’s Jack/St. Malo project, which will tie a platform to the ocean floor 7,000 feet below the surface and tap a reservoir 26,000 feet deep, costs $7.5 billion.

It may become the biggest such platform in the world after shipping out later this year, with the ability to double its initial 170,000 bpd capacity. It will be followed next year by Chevron’s second new platform, Big Foot, to be secured to the sea floor by 16 miles of interlocking metal strands, or tendons.

In addition to projects by Anadarko Petroleum Corp (APC.N) and Williams Cos (WMB.N), private equity firm Blackstone Energy Partners will join the game. In 2015, Blackstone’s partner LLOG Exploration aims to start up Delta House – named for the boisterous fraternity in the film “Animal House” – less than 10 miles from BP’s plugged Macondo well.

Delta House will pump oil from the Marmalard and Bluto fields, namesakes of characters in the movie.

CLEAR AND STABLE RULES

Three years ago, some analysts thought the post-Macondo Gulf would have fewer players as stricter regulations and higher operating chilled activity, particularly for smaller companies.

Producers must now provide more detailed plans for offshore operations, submit to more frequent inspections and prove they have access to a rapid-response system to cap a gushing well. More than 4 million barrels of oil poured into the sea for 87 days after the Macondo well blowout killed 11 men.

High costs have given some companies pause. Even as BP began appraisal drilling at its self-described “giant” Tiber field this August, a month later it canceled contracts to build a second platform at its Mad Dog field. BP says it wants to move forward on Mad Dog 2 “with the right plan.”

Many others are pressing ahead full steam.

“It hasn’t scared us away,” John Hollowell, Shell’s top deepwater executive for Shell Upstream Americas said, noting deepwater is one-third of Shell’s growth platform, alongside natural gas and unconventional areas like onshore shales.

Hess Corp (HES.N) Chief Executive John Hess has told analysts the company, which operates one oil and gas platform in the Gulf with another on the way next year, also aims to increase its exploration in the deep waters.

“It’s a core area for us and now that Macondo is behind the industry, it is an area where we intend to start investing more, assuming we get the returns that we expect,” he said.

Companies say the Gulf is still the best deepwater basin to set up shop – with high profit margins, reasonable per-barrel costs and a predictable legal and regulatory system.

Operators can bring in their own workers rather than employ a certain number from the host country, as they do in Brazil – where just finding enough qualified workers is a hurdle.

Gulf operators also do not have to brace themselves for sudden changes in royalty requirements or possibly be blocked from bidding on drilling rights, as has happened in Angola.

To get in the Gulf of Mexico’s door, they put in the highest bid when the government leases drilling rights.

“All you have to do is show up at the lease sale,” Statoil’s Averty said.

(Editing by Eric Walsh)

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Houston TX: Chevron to Build Office Building in the World’s Energy Capital

Chevron U.S.A. Inc. announced plans to construct an office building in downtown Houston to accommodate its business growth and expanding workforce in the world’s energy capital.

The 50-story, 1.7 million-square-foot building will be located at 1600 Louisiana Street at Pease. Together with Chevron’s existing properties at 1500 Louisiana and 1400 Smith, the buildings will comprise an urban campus with indoor and outdoor common areas, enhanced dining facilities, a fitness center, training and conference facilities, and additional parking.

“This announcement underscores Chevron’s long-term commitment to Houston and its role as the epicenter of the global energy industry,” said Bereket Haregot, president of Chevron’s Business and Real Estate Services division. “Houston plays a vital and growing role in Chevron’s global business. The new building and expanded urban campus will provide a first-rate work environment for our employees and help us remain the employer of choice.”

The headquarters of Chevron Corporation, the parent company of Chevron U.S.A., will remain in California, where they have been located for more than 130 years.

Final investment decision for the project, designed by HOK, is expected in the second quarter of 2014. Groundbreaking will follow final investment decision, and occupancy is anticipated to begin in the fourth quarter of 2016.

Press Release, July 4, 2013

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Chevron Strikes Oil at Coronado Prospect in U.S. Gulf of Mexico

Chevron Corporation has announced an oil discovery at the Coronado prospect in the deepwater U.S. Gulf of Mexico.

The Walker Ridge Block 98 Well No. 1 encountered more than 400 feet (122 m) of net pay. The well is located approximately 190 miles (308 km) off the Louisiana coast in 6,127 feet (1,868 m) of water and was drilled to a depth of 31,866 feet (9,713 m).

“The Coronado discovery demonstrates how Chevron is achieving its strategy of superior exploration performance,” said George Kirkland, vice chairman, Chevron Corporation. “The discovery adds to our global portfolio of high-quality opportunities for future growth.”

“The Coronado discovery continues our string of exploration successes in the Lower Tertiary Trend, where Chevron is advancing multiple projects,” said Gary Luquette, president, Chevron North America Exploration and Production Company. “It also highlights the importance of the deepwater Gulf of Mexico as a source of domestic energy for the United States.”

The well results are still being evaluated, and additional work is needed to determine the extent of the resource. Chevron, with a 40 percent working interest in the prospect, is the operator of the Coronado discovery well. Other owners are ConocoPhillips with 35 percent, a subsidiary of Anadarko Petroleum Corporation with 15 percent and Venari Offshore LLC with 10 percent.

Chevron is one of the largest leaseholders in the Gulf of Mexico and is currently constructing the Jack/St. Malo and Big Foot projects, which are scheduled to begin production in 2014.The company is also conducting appraisal activities at its previously announced Buckskin and Moccasin discoveries, also in the Lower Tertiary Trend.

Chevron Strikes Oil at Coronado Prospect in U.S. Gulf of Mexico| Offshore Energy Today.

Gulf of Mexico: Chevron Announces Successful Production Well Test on St. Malo PS003 well

Chevron Corporation today announced that it had conducted a successful production test on the St. Malo PS003 well in the prolific Lower Tertiary trend in the deepwater Gulf of Mexico. Oil flow rates, though limited by testing equipment constraints, exceeded 13,000 barrels of oil per day.

The test, in Walker Ridge Block 678, targeted Lower Tertiary sands more than 20,000 feet (6,096 m) under the sea floor and was conducted during August and September 2012. This is the first development well in the St. Malo field, which is being jointly developed with the Jack field.

“The well test is a further demonstration of the potential of the Lower Tertiary and highlights our leadership in developing deepwater resources globally,” said Chevron Vice Chairman George Kirkland.

The results of this production test further confirm the significance of the St. Malo field,” said Gary Luquette, president, Chevron North America Exploration and Production Company. “The jointly developed Jack and St. Malo fields are expected to provide a major step-up in Chevron’s production from 2014 and produce domestic energy for decades to come.”

The Jack and St. Malo fields are located within 25 miles (40 km) of each other and are being jointly developed with a host floating production unit located between the two fields in 7,000 feet (2,134 m) of water, approximately 280 miles (450 km) south of New Orleans, Louisiana. The facility is planned to have a design capacity of 177,000 barrels of oil-equivalent per day to accommodate production from the Jack/St. Malo development, which is estimated at a maximum total daily rate of 94,000 barrels of oil-equivalent, plus production from third-party tiebacks. Total project costs for the initial phase of the development are estimated at $7.5 billion.

Chevron has a working interest of 51 percent in the St. Malo field. Other owners of the St. Malo field are Petrobras (25 percent), Statoil (21.5 percent), ExxonMobil (1.25 percent) and ENI (1.25 percent).

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