News Extra: Chevron greenlights largest oil project since 2014
08 August 2016
US oil major Chevron has approved a US$36.8bn expansion of the Tengiz oilfield in Kazakhstan, the largest single investment by the sector since the oil-price crash in 2014. The Future Growth and Wellhead Pressure Management Project (FGP-WPMP) project will increase oil production by 260,000 barrels of oil equivalent per day (boe/d), adding around 50% to the current 514,000 boe/d output.
Tengiz – Image: TCO
The field is operated by the Tengizchevroil (TCO) joint venture in which Chevron has a 50% stake alongside Exxon Mobil (25%), KazMunayGas (20%) and LukArco (5%). The expansion project will raise TCO’s total production to approximately 1m boe/d. First oil from the expansion is expected by 2022.
The funding will include US$27.1bn for facilities, US$3.5bn for wells and US$6.2bn for contingency and escalation. The project will be split into two parts: FGP will boost production by injecting gas into the reservoir and WPMP will maintain pressure in the field. Over the life of the project, TCO anticipates creating approximately 20,000 jobs.
The project will maximise the value of existing TCO facilities by extending the production plateau and keeping existing plants producing at full capacity. It will use sour gas injection technology, which was developed and proven during TCO’s previous expansion in 2008, to enhance oil recovery. That project took five years and cost $7.2 billion.
“This project builds on the successes of prior expansions at Tengiz and is ready to move forward,” said Jay Johnson, executive vice president of upstream for Chevron. “It has undergone extensive engineering and construction planning reviews and is well-timed to take advantage of lower costs of oil industry goods and services.”
Chevron is Kazakhstan's largest private oil producer, holding stakes in the nation's two biggest oil fields-Tengiz and Karachaganak. The group also is the largest private shareholder in the Caspian Pipeline Consortium, which operates a 935-mile crude oil pipeline from Tengiz to Novorossiysk on the Russian coast of the Black Sea, the key export route for crude oil from TCO and Karachaganak.
John Watson, Chevron chairman and chief executive officer, said FGP-WPMP "builds on a record of strong performance at Tengiz and will add value for Chevron."
Chevron’s plans follow the announcement that BP will go ahead with a planned $8 billion expansion of its Tangguh LNG project in Indonesia and have led some industry observers to suggest that the sector could be in expansion mode once again after a period of retrenchment caused by the fall in the oil price.
Other recent project greenlights include Italian oil company Eni's Zohr gas field off the coast of Egypt and Talos Energy's Tornado field in the Gulf of Mexico.
Wood Mackenzie said in January that 68 major projects worth US$380bn had been shelved as a result of lower oil prices.
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