28th Jul 2005 07:04
BHP Billiton PLC28 July 2005 Date 28 July 2005Number 31/05 BHP BILLITON QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT ACTIVITIES April 2005 - June 2005 This report covers exploration and development activities for the quarter ended30 June 2005. Unless otherwise stated, BHP Billiton's interest in the projectsreferred to in this report is 100 per cent, and references to quarters are basedon calendar years. As highlighted in last quarter's report, global demand for raw materials remainsstrong and the consequent increased project construction activity across theindustry continues to drive tight labour markets and increasing input costs,with a weak US dollar adding further cost pressure. These pressures areparticularly acute in Australia. In this environment, BHP Billiton remainscommitted to working with its suppliers, contractors and other stakeholders tomitigate the effect of these cost pressures where possible. However, some BHPBilliton projects are expected to run over original Board approved budgets andcost reviews are being conducted at some projects. Despite these challengingconditions, all of our projects are tracking in line or ahead of schedule. Two projects were commissioned during the quarter, Dendrobium (Australia) andPanda Underground (Canada), bringing to eight the total commissioned during the2005 financial year. PETROLEUM DEVELOPMENT Atlantis South Development, Gulf of Mexico, USA (BHP Billiton 44%, non-operated) In February 2005, BHP Billiton approved a revised budget of US$1.1 billion forthe development of the Atlantis South oil and gas reserves. The Atlantis Southdevelopment will have a gross nameplate daily capacity of 200,000 barrels of oiland 180 million cubic feet of natural gas. During the quarter the productionplatform's hull and topsides facilities were delivered to the construction yardsin Texas, USA and integration work has commenced. The project remains onschedule for first production in the third quarter of 2006. North West Shelf expansion, Australia (BHP Billiton 16.67%, non-operated) In June 2005, BHP Billiton announced the approval of an expansion to theliquefied natural gas (LNG) processing facilities at the North West ShelfProject in Western Australia. The project includes the construction of a fifthliquefaction processing train with a gross capacity of 4.2 million tonnes perannum, additional processing facilities and associated infrastructure. At itscompletion, the expansion will increase the gross production capacity of theNorth West Shelf Project to 15.9 million tonnes of LNG per annum. Theengineering, procurement and construction management contracts have been let andengineering and procurement activities are underway. BHP Billiton's share ofdevelopment costs, based on the operator's estimate, is approximately US$250million. First production is expected by late 2008. Neptune Development, Gulf of Mexico, USA (BHP Billiton 35%, operated) In June 2005, BHP Billiton announced the approval of the Neptune oil and gasdevelopment in the Gulf of Mexico. The project includes the construction,installation, and operation of a stand-alone platform and associated subseasystem with seven wells. The facility will have a gross nameplate daily capacityof 50,000 barrels of oil and 50 million cubic feet of gas per day. Detaileddesign is underway and major equipment and fabrication contracts have beenplaced. Development costs are estimated at US$850 million (BHP Billiton shareUS$300 million) with first production expected by the end of 2007. MINERALS DEVELOPMENT Aluminium Worsley Development Capital Projects (DCP), Australia (BHP Billiton 86%) The Worsley Alumina DCP were approved in May 2004 with a budget of US$192million (US$165 million BHP Billiton share). The projects will increase aluminacapacity by 250,000 tonnes per annum (215,000 tonnes per annum BHP Billitonshare) to a capacity of 3.5 million tonnes per annum (3.01 million tonnes perannum BHP Billiton share). Overall the projects are greater than 48 per centcomplete. Engineering and procurement activities are substantially complete andconstruction activities are progressing, with all major contractors nowmobilised and working on site. Commissioning of the DCP is scheduled for thefirst quarter of 2006. Base Metals Escondida Norte, Chile (BHP Billiton 57.5%) The development of the Escondida Norte pit, located approximately 5 kilometresnorth of the existing Escondida mining operations, was approved in June 2003.Pre-mine waste stripping continued during the quarter with total materialmovement of 198 million tonnes to the end of June 2005. Field activities are nowfocussed on pre commissioning and commissioning activities, with the controlsystem for the integration of the Escondida Norte ore into the existing mineraldistribution system ready for implementation. Overall project progress is onschedule to meet first ore delivery to the crusher in the fourth quarter of2005. Development costs are estimated at US$400 million (BHP Billiton shareUS$230 million). Escondida Sulphide Leach, Chile (BHP Billiton 57.5%) The Escondida Sulphide Leach project was approved in April 2004. The projectwill produce 180,000 tonnes (103,500 tonnes BHP Billiton share) of coppercathode per annum, utilising a bacterially assisted leaching process onlow-grade run-of-mine ore from both the Escondida and Escondida Norte pits. Theresulting solutions will then be treated in conventional solvent extraction andelectrowinning plants. During the quarter, the installation of the leach pad wascompleted, and ore stacking of the pad commenced. Construction activitiesunderway include the continuation of civil works and structural steel erectionin the solvent extraction, electrowinning and desalination plants. Developmentcosts are estimated at US$870 million (US$500 million BHP Billiton share) andproduction is scheduled to begin during the second half of 2006. Spence, Chile The Spence Project, approved in October 2004, will be a new open cut mine withassociated plant facilities capable of producing 200,000 tonnes per annum ofcopper cathode through a combination of chemical and bacterial leaching. Allmajor equipment is currently being fabricated and continues to arrive on site.Construction of mine infrastructure has commenced and the major earthworkscontracts are underway, with earthworks for the crushing, solvent extraction andelectrowinning plants complete. The construction camp and temporary officefacilities are now operational and the power line and main substation are beingtested ahead of planned first power. Development costs are estimated at US$990million and production is scheduled to begin during the last quarter of 2006. Carbon Steel Materials Rapid Growth Project 2, Australia (BHP Billiton 85%) The Rapid Growth Project 2 (RGP2) was approved in October 2004. The projectcomprises increases in mine, rail and port capacity through the development ofOre Body 18, purchase of additional rolling stock and a new car dumper atFinucane Island. Engineering activities are substantially complete, tenderingand procurement processes are well advanced and site activities are proceedingto schedule. The project will increase installed capacity at Western AustralianIron Ore to 118 million tonnes per annum by the second half of 2006. Developmentcosts are estimated at US$575 million (BHP Billiton share US$489 million). Diamonds and Specialty Products Panda Underground Project, EKATI Diamond Mine, Canada (BHP Billiton 80%) The Panda Underground Project, approved in May 2004, is a 2,600 tonnes per daysub-level retreat mine that will deliver approximately 4.6 million tonnes of oreand 4.7 million carats of high value Panda diamonds to the EKATI process plantover a 6 year production life. Underground pre-production development iscomplete and all remaining large equipment was successfully delivered to themine site during the eight week 2005 winter ice road season. The productionramp-up phase is underway and tracking well, with full production expected inearly 2006. Development costs are estimated at US$182 million (BHP Billitonshare US$146 million). As the project's production ramp up has successfullycommenced, it will no longer be included in this report. Stainless Steel Materials Ravensthorpe Nickel Project, Australia The Ravensthorpe Nickel Project was approved in March 2004. The project includesthe development of a mine, treatment plant and associated infrastructure nearRavensthorpe in Western Australia. The Ravensthorpe processing plant willproduce a mixed nickel-cobalt hydroxide intermediate product (MHP). Engineeringand procurement activities are proceeding to schedule. On site, bulk earthworksare effectively complete as are approximately 50 per cent of concrete works.Construction contracts are underway, with four steel erection contractorsmobilised and operational at site. Given the current Australian constructionmarket, a review of project costs is underway. The first shipment of MHP isexpected by the second quarter of 2007. Yabulu Extension Project, Australia The Yabulu Extension Project was approved in March 2004. The metal refiningsection of the QNI Yabulu refinery near Townsville in Queensland is beingexpanded to process up to 220,000 tonnes of MHP. This additional processingcapacity will increase refinery production to 76,000 tonnes of nickel and 3,500tonnes of cobalt. Engineering and procurement activities are proceeding toschedule. Site construction contracts are progressing well and detailed tie-inplanning is advancing. Given the current Australian construction market, areview of project costs is underway. First nickel metal production is expectedfrom the expanded Yabulu refinery by late 2007. PETROLEUM EXPLORATION Exploration and appraisal wells drilled during the quarter or in the process ofdrilling as at 30 June 2005. WELL LOCATION BHP BILLITON EQUITY STATUS Joseph Gulf of Mexico, 20% BHP Billiton; Temporarily plugged and High Island Block 10L Shell operator abandoned. Blackbeard West Gulf of Mexico, 5% BHP Billiton; Drilling ahead. South Timbalier Block 168 Exxon operator Mustang Gulf of Mexico, 43.66% BHP Billiton and Hydrocarbons encountered. West Cameron 77 OCS-G-9387 operator Preparing to run completion and #2 sidetrack. Knotty Head Gulf of Mexico, 25% BHP Billiton; Hydrocarbons encountered in Green Canyon 512 Unocal operator secondary target. Drilling ahead. Cascade-2 Gulf of Mexico, 50% BHP Billiton and Hydrocarbons encountered. Walker Ridge 206 operator Running logs. Mad Dog Deep Gulf of Mexico, 23.9% BHP Billiton; Drilling ahead. Green Canyon 826 BP operator Little Burn Gulf of Mexico, 60% BHP Billiton and Drilling ahead. Green Canyon 282 operator Bonsai Gulf of Mexico, 34% BHP Billiton; Drilling ahead. Atwater Valley 398 BP operator Shenzi-5 Gulf of Mexico, 44% BHP Billiton and Hydrocarbons encountered. Green Canyon 654 operator Temporarily plugged and abandoned. Langdale Australia / Asia 40% BHP Billiton and Plugged and abandoned. Exmouth Plateau operator Hydrocarbons encountered. MINERALS EXPLORATION The Minerals Exploration group of BHP Billiton continued to pursue globalexploration opportunities for key commodities of interest utilising bothin-house capabilities and the Junior Alliance Programme. Exploration drilling continued on diamond targets in Canada, Namibia and Angola;and on porphyry copper targets in Chile and Peru. Exploration for iron ore, coaland bauxite was undertaken in a number of regions including Australia, Braziland West Africa. The integration of the ex-WMC nickel portfolio will see asignificant increase in BHP Billiton exploration activities in WesternAustralia, where a major exploration office will be located. EXPLORATION EXPENDITURE During the quarter, BHP Billiton spent US$56 million on minerals exploration, ofwhich US$55 million was expensed (US$149 million gross and US$147 millionexpensed year to date), and US$137 million on petroleum exploration, of whichUS$70 million was expensed (US$380 million gross and US$202 million expensedyear to date). **** Further information on BHP Billiton can be found on our Internet site: http://www.bhpbilliton.com Australia United KingdomJane Belcher, Investor Relations Mark Lidiard, Investor & Media RelationsTel: +61 3 9609 3952 Mobile: +61 417 031 653 Tel: +44 20 7802 4156 Mobile: +44 7769 934 942email: [email protected] email: [email protected] Tania Price, Media Relations Ariane Gentil, Media RelationsTel: +61 3 9609 3815 Mobile: +61 419 152 780 Tel: +44 20 7802 4177 Mobile: +44 78 81 51 8715email: [email protected] email: [email protected] United States South AfricaTracey Whitehead, Investor & Media Relations Michael Campbell, Investor & Media RelationsTel: US +1 713 599 6100 or UK +44 20 7802 4031 Tel: +27 11 376 3360 Mobile: +27 82 458 2587Mobile: +44 7917 648 093 email: [email protected]: [email protected] BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number 3196209Registered in Australia Registered in England and WalesRegistered Office: Level 27, 180 Lonsdale Street Melbourne Registered Office: Neathouse Place London SW1V 1BH UnitedVictoria 3000 KingdomTelephone +61 1300 554 757 Facsimile +61 3 9609 3015 Telephone +44 20 7802 4000 Facsimile +44 20 7802 4111 The BHP Billiton Group is headquartered in Australia This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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