27th Oct 2005 07:01
BHP Billiton PLC27 October 2005 27 October 200543/05 BHP BILLITON QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT ACTIVITIES July 2005 - September 2005 This report covers exploration and development activities for the quarter ended30 September 2005. Unless otherwise stated, BHP Billiton's interest in theprojects referred to in this report is 100 per cent, and references to projectschedules are based on calendar years. During the quarter, cost reviews were completed for the Ravensthorpe and Yabuluprojects (both Australia). Due to the impact of demand driven tightness in theAustralian labour market, rising input costs and a weakening US dollar, anincreased capital budget for both of these projects has been approved. Whilstthese industry wide conditions continue to challenge other BHP Billitondevelopment projects, all of our projects are tracking in line or ahead ofschedule. Since last reporting, Escondida Norte (Chile) has been successfully commissionedon schedule. Development costs are being finalised, however it is expected thefinal cost will be below budget in local currency and marginally above budget inUS dollars due to the strengthening of the Chilean peso. During October 2005, the Rapid Growth Project 3 expansion at Western AustraliaIron Ore and the Samarco (Brazil) expansion received Board approval. Theseprojects will be included in the December 2005 Exploration and Developmentreport. 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, integration workcontinued on the Atlantis production facility at construction yards in Texas,USA. The personnel quarters have been installed and other commissioning work isprogressing. Despite the hurricane related work interruptions in July andSeptember, the project currently remains on schedule for first production in thethird quarter of 2006. North West Shelf expansion, Australia (BHP Billiton 16.67%, non-operated) In June 2005, BHP Billiton approved an expansion to the liquefied natural gas(LNG) processing facilities at the North West Shelf Project in WesternAustralia. The project includes the construction of a fifth liquefactionprocessing train with a gross annual capacity of 4.2 million tonnes, additionalprocessing facilities and associated infrastructure. Engineering and procurementactivities are continuing whilst site preparations and the installation oftemporary facilities have commenced. BHP Billiton's share of development costs,based on the operator's estimate, is approximately US$250 million. Firstproduction is expected by late 2008. Neptune Development, Gulf of Mexico, USA (BHP Billiton 35%, operated) In June 2005, BHP Billiton approved the Neptune oil and gas development in theGulf of Mexico. The project includes the construction, installation andoperation of a stand-alone platform and the associated subsea system with sevenwells. The facility will have a gross nameplate daily capacity of 50,000 barrelsof oil and 50 million cubic feet of gas per day. Design, engineering andmanufacturing of the subsea equipment continued during the quarter. Contractsfor the design, procurement and construction management of the productionplatform and for fabrication of the topsides and the hull have been awarded.Orders have been placed for all major equipment and materials. Development costsare estimated at US$850 million (BHP Billiton share US$300 million) with firstproduction 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). Engineering and procurement activities are completeand construction activities are now focused on completing work in preparationfor the tie-in of individual components to existing operations. Commissioning ofthe DCP are scheduled for the first 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 236 million tonnes to the end of September 2005. On 1 October, 2005,Escondida Norte ore was successfully integrated on schedule into the existingmineral distribution system. Development costs are in the process of beingfinalised. However, before foreign exchange variation, development costs areexpected to be 3 per cent below the originally approved budget of US$400M (BHPBilliton share US$230M). Including the impact of the stronger Chilean peso, theproject is expected to be approximately 8 per cent higher than the budgetedamount. As the project has successfully been commissioned, it will no longer beincluded in this report. 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, ore stacking continued withapproximately 11 million tonnes of ore being delivered to the pad. Constructionactivities transitioned from mainly civil works to structural steel erection andpiping and mechanical installation in the solvent extraction, electrowinning anddesalination plants. A project budget of US$870 million (US$500 million BHPBilliton share) was approved by the Board and production is scheduled to beginduring 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. Majorequipment and bulk materials continue to arrive on site and mine pre-stripoperations have commenced. Permanent electrical power is now available on siteand construction of the mine and administration infrastructure and the majorearthworks are almost complete. Concrete work in all areas of the process planthas commenced and the liner placement contract for the heaps and ponds has beenawarded and is underway. All major construction contracts have been bid and arecurrently being evaluated. A project budget of US$990 million was approved bythe Board 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. Site activities continue to proceed to schedule withconstruction now focused on preparation for initial commissioning activities.The project will increase installed capacity at Western Australian Iron Ore by 8million tonnes per annum by the second half of 2006 (this will be offset by an 8million tonnes per annum reduction in capacity due to the suspension of theGoldsworthy ship loading operations at Finucane Island in the third quarter of2006 to allow for the replacement of ageing berth and production infrastructureas part of the RGP3 expansion). Development costs are estimated at US$575million (BHP Billiton share US$489 million). 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 continue to proceed to schedule. Earthworks in theprocess plant and mine maintenance areas are now complete with concrete works inall areas well advanced and structural steel and tank erection accelerating. Offsite fabrication and infrastructure works are proceeding to schedule. Followinga review of project costs completed in August 2005, a revised budget of US$1,340million has been approved. This is 28 per cent above the originally approvedbudget. The first shipment of MHP remains on schedule for the second quarter of2007. Yabulu Extension Project, Australia The Yabulu Extension Project was approved in March 2004. The metal refiningsection of the Yabulu refinery near Townsville in Queensland is being expandedto process up to 220,000 tonnes of MHP. This additional processing capacity willincrease refinery production to 76,000 tonnes of nickel and 3,500 tonnes ofcobalt. Engineering and procurement activities are proceeding to schedule andthe project team has now fully relocated to site. Infrastructure, access roadsand earthworks are progressing and piling activity is underway. Detailed tie-inplanning is continuing. Following a review of project costs completed in August2005, a revised budget of US$460 million has been approved. This is 31 per centabove the originally approved budget. First nickel metal production from theexpanded Yabulu refinery is on schedule for the third quarter of 2007. PETROLEUM EXPLORATION Exploration and appraisal wells drilled during the quarter or in the process ofdrilling as at 30 September 2005. WELL LOCATION BHP BILLITON EQUITY STATUSMustang Gulf of Mexico, 43.66% BHP Billiton Hydrocarbons encountered. Temporarily plugged and West Cameron 77 and operator abandoned. OCS-G-9387 #2Little Burn Gulf of Mexico, 60% BHP Billiton and Hydrocarbons encountered. Temporarily plugged and Green Canyon 282 operator abandoned.Mad Dog Gulf of Mexico, 23.9% BHP Billiton; At target depth. Running Logs.Deep Green Canyon 826 BP operatorBlackbeard Gulf of Mexico, 5% BHP Billiton; Drilling ahead.West South Timbalier Exxon operator Block 168Cascade-2 Gulf of Mexico, 50% BHP Billiton and Hydrocarbons encountered. Temporarily plugged and Walker Ridge 206 operator abandoned. Sidetrack drilling ahead.Knotty Head Gulf of Mexico, 25% BHP Billiton; Hydrocarbons encountered. Drilling ahead. Green Canyon 512 Unocal operatorBonsai Gulf of Mexico, 34% BHP Billiton; Drilling ahead. Atwater Valley BP operator 398Puma-2 Gulf of Mexico, 33.3% BHP Billiton; Top hole drilled, temporarily suspended. Rig currently Green Canyon 206 BP operator in shipyard for repairs.Everest Gulf of Mexico, 34% BHP Billiton; Top hole drilled, temporarily suspended. Rig Atwater Valley BP operator redeployed to finish logging Mad Dog Deep. 272Gypsy-1 Trinidad Block 2 39.3% BHP Billiton Dry hole. Plugged and abandoned. (c) REA and operatorBrecknock-2 Western 8.33% BHP Billiton At total depth. Completed logging. Well testing Australia Woodside operator ongoing. Browse Basin WA-32-RNorth Victoria, 50% BHP Billiton; Dry hole. Plugged and abandoned.Wirrah-1 Australia Esso operator Gippsland Basin Vic / L2Maliri-1 Sindh Province 37.5% BHP Billiton; Dry hole. Plugged and abandoned. Pakistan Premier operator Jhangara E.L.Davan-1 UK North Sea 35% BHP Billiton; Drilling ahead. Block 9 / 5a-4 Total operator Following several hurricanes, exploration and development drilling in the Gulfof Mexico was temporarily suspended during the quarter. Exploration and drillingactivity has since resumed, however as a result of the disruptions, all wellschedules in the Gulf of Mexico have been delayed by 4 to 6 weeks. 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 continued on diamond targets in Canada, Angola and Botswana; and onporphyry copper targets in Chile, Peru and the Democratic Republic of Congo.Exploration for iron ore, coal and bauxite was undertaken in a number of regionsincluding Australia, Brazil and West Africa. The integration of WMC'sexploration activities was completed with a corresponding increase in nickelexploration activities in Western Australia. EXPLORATION EXPENDITURE During the quarter, BHP Billiton spent US$39 million on minerals exploration, ofwhich US$39 million was expensed, and US$127 million on petroleum exploration,of which US$56 million was expensed. **** 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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