27th Jan 2005 07:01
BHP Billiton PLC27 January 2005 Date 27 January 2005Number 03/05 BHP BILLITON QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT ACTIVITIES October 2004 - December 2004 This report covers exploration and development activities for the quarter ended31 December 2004 and projects commissioned to the date of this report. Unlessotherwise stated, BHP Billiton's interest in the projects referred to in thisreport is 100 per cent, and references to quarters are based on calendar years. Five projects have been commissioned since the September 2004 quarter. Of the remaining ten projects that were under construction during the quarter,all are tracking on or ahead of schedule and eight are within original Boardapproved expenditure limits. The exceptions are Atlantis and Dendrobium. PETROLEUM DEVELOPMENT Mad Dog Development, Gulf of Mexico, USA (BHP Billiton 23.9%, non-operated) BHP Billiton announced its sanction of the Mad Dog oil and gas field in February2002. The Mad Dog facility has a revised daily capacity of 100,000 barrels ofcrude oil (up from 80,000) and 60 million cubic feet of natural gas (up from 40million). First production from Mad Dog was achieved on 13 January 2005.Budgeted capital expenditure is US$368 million (BHP Billiton share). As theproject has now been successfully commissioned, it will no longer be included inthis report. Greater Angostura Development, Trinidad (BHP Billiton 45%, operated) In March 2003, BHP Billiton approved the first development phase of theAngostura oil and gas field off the northeast coast of Trinidad. First gasproduction from Angostura was achieved on 16 December 2004 and first oil wasachieved on 9 January 2005. With a nameplate capacity of 100,000 barrels of oilequivalent per day, the development is expected to produce initially at a dailygross rate of 60,000 barrels of oil equivalent. Budgeted capital expenditure isUS$327 million (BHP Billiton share). As the project has now been successfullycommissioned, it will no longer be included in this report. ROD Integrated Development, Algeria (BHP Billiton 36.04%, joint operating entitycomprising BHP Billiton/SONATRACH) The ROD Integrated Development consists of six satellite oil fields in theBerkine Basin in eastern Algeria. Production of oil from these fields commencedto schedule in October 2004 at an initial rate of 20,000 barrels of oil per day,with initial processing taking place in the adjacent BRN processing facility.The construction of the ROD stand-alone oil reception, processing, storage andexport facilities were successfully completed on 31 December 2004, and oil isbeing processed and exported through the new Central Processing Facility (CPF).Water will shortly be re-injected into the reservoir to provide pressuresupport, and commissioning of the gas injection facilities is nearingcompletion. Following a ramp-up in production, the CPF will processapproximately 80,000 barrels of Saharan Blend crude oil per day. Budgetedcapital expenditure is US$192 million (BHP Billiton share). As the project hasnow been successfully commissioned, it will no longer be included in thisreport. Minerva, Australia (BHP Billiton 90%, operated) In May 2002, BHP Billiton approved the Minerva gas field project in the offshoreOtway Basin in Victoria. Construction of the gas plant was completed in December2004 and the facilities handed over for commissioning. First production fromMinerva was achieved on 18 January 2005, approximately two weeks later than therevised schedule. In the March 2004 quarter, budgeted capital expenditure wasincreased to US$150 million (BHP Billiton share). As the project has now beensuccessfully commissioned, it will no longer be included in this report. Caesar/Cleopatra Transportation Systems, Gulf of Mexico, USA (BHP Billitoninterest in Caesar pipeline, 25%; interest in Cleopatra pipeline, 22%.Non-operated) BHP Billiton acquired respective 25 and 22 per cent interests in the Caesar oiland the Cleopatra gas pipelines. These pipelines will transport production fromthe Mad Dog and Atlantis fields to pipelines closer to shore. Commissioning ofboth Caesar and Cleopatra was to schedule in December 2004, with thecommencement of oil and gas production from a third-party facility. Oil and gasproduction from the Mad Dog field has now commenced and is flowing through theCaesar and Cleopatra pipelines. Budgeted capital expenditure is US$132 million(BHP Billiton share). As the project has now been successfully commissioned, itwill no longer be included in this report. Atlantis Development, Gulf of Mexico, USA (BHP Billiton 44%, non-operated) BHP Billiton approved US$1.1 billion for the development of the Atlantis oil andgas reserves in February 2003. During the quarter, the Board sanctioned anadditional US$121 million (BHP Billiton share) to enhance capacity and allow forinflationary related cost pressures. The facility will now have a grossnameplate daily capacity of 200,000 barrels of oil (up from 150,000) and 180million cubic feet of natural gas. The initial development drilling campaign hasbeen completed and the project remains on schedule for first production in thethird quarter of 2006. MINERALS DEVELOPMENT Aluminium Worsley Development Capital Projects (DCP), Australia (BHP Billiton 86%) The Worsley Alumina Development Capital Projects were approved in May 2004 witha budget of US$192 million (US$165 million BHP Billiton share). The projectswill increase alumina capacity by 250,000 tonnes per annum (215,000 tonnes perannum BHP Billiton share) to 3.5 million tonnes per annum (3.01 million tonnesper annum BHP Billiton share). Overall the projects are greater than 30 per centcomplete. Engineering and procurement activities are well advanced andconstruction work is progressing with the major civil works almost complete.Erection of the desilication, precipitation and deep cone washer tanks hascommenced. Commissioning of the DCP is 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 to the end of December 2004 equalling 126 million tonnes. Projectdevelopment during the period involved the commencement of the crushing stationand both silo structures, with work on the overland conveyor alignmentcontinuing. Preparation for the commissioning of the electrical powerdistribution system has commenced. Overall project progress is approximately 55per cent complete with pre-mine development, design and construction activitieson track 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. Detailed engineering and procurement activities arecontinuing. Construction underway includes erection of the rhyolite crushingfacilities, leach pad base preparation, mine haulage road tunnels, and thesolvent extraction and electrowinning base preparation. Development costs areestimated at US$870 million (US$500 million BHP Billiton share) and productionis 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.Engineering and procurement is well advanced and initial construction isunderway. Major equipment orders including mine equipment and high voltageelectrical equipment have been released for fabrication. The road relocation isover 80 per cent complete and construction of initial camp and office facilitieshas commenced. Recruitment of the senior operating team is complete and hiringof personnel for mine operations continues. Development costs are estimated atUS$990 million and production is scheduled to begin during the last quarter of2006. Carbon Steel Materials Dendrobium Coal Project, Australia The Dendrobium Mine will be a low cost underground longwall operation capable ofproducing 5.2 million tonnes per annum of raw coal (3.6 million tonnes per annumof clean coal). The mine surface facilities, ventilation shaft, washery upgradeand Kemira Valley Rail Coal Loading facilities have been successfullycommissioned. Process commissioning of the first module of the thermal drier andmining development for Longwall 1 are progressing. Revised development costs areestimated at US$200 million and production is scheduled to commence in mid 2005. 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 (OB18), purchases of additional rolling stock and a new car dumperat Finucane Island. Initial engineering activities are underway, and thetendering and procurement processes are commencing. The project will increaseinstalled capacity at Western Australian Iron Ore to 118 million tonnes perannum by the second half of 2006. Development costs are estimated at US$575million (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, will be a 2,600 tonnes perday sub-level retreat mine that will deliver approximately 4.6 million tonnes ofore and 4.7 million carats of high value Panda diamonds to the EKATI processplant over a 6 year production life. Underground mine development is progressingto schedule while construction activities associated with the mine surfacefacilities are well advanced. Three of four ventilation shafts have beencompleted. Development costs are estimated at US$182 million (BHP Billiton shareUS$146 million), with first ore production on schedule for early 2005 and fullproduction in early 2006. 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. Significant contractsawarded during the period included the concrete works and site erected tanks.The construction water and power systems, stage 1 of the construction camp andthe new regional airstrip are now fully operational, and sealing of the majoraccess roads is well advanced. Development costs are estimated at US$1.05billion, with the first shipment of MHP expected 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. Significant activities during the period included the awarding of thecalciner contract and the tender of the plant infrastructure works. Developmentcosts are estimated at US$350 million, with first nickel metal production fromthe expanded Yabulu refinery expected by late 2007. PETROLEUM EXPLORATION Exploration and appraisal wells drilled during the quarter or in the process ofdrilling as at 31 December 2004. WELL LOCATION BHP BILLITON EQUITY STATUS Scarborough-3 Australia, Exmouth 50% BHP Billiton and Currently pulling out of hole and extracting Plateau operator (1) core sample for examination/analysis. Joseph-1 Gulf of Mexico, High 20% BHP Billiton; Shell Drilling ahead. Island Block 10L operator Makalu-1 Gulf of Mexico, 30% BHP Billiton; Drilling ahead. Mississippi Canyon Chevron Texaco operator Shenzi-3 and Gulf of Mexico, 44% BHP Billiton and Hydrocarbons encountered.Side Tracks Green Canyon 653 operator See News Release of 15 November 2004 Shenzi-4 Gulf of Mexico, 44% BHP Billiton and Drilling Ahead. Green Canyon 653 operator Mad Dog Gulf of Mexico, 23.9% BHP Billiton; BP Drilling Ahead.Southwest Green Canyon 825 OperatorRidge (1) Sole risk - BHP Billiton funding 100% of the evaluation activity. MINERALS EXPLORATION The Minerals Exploration group of BHP Billiton continued to pursue globalexploration opportunities for key commodities of interest utilising both theJunior Alliance Programme and in-house capabilities. Exploration drilling continued on diamond targets in Canada, Botswana andNamibia; on porphyry copper targets in Chile and Pakistan; and on nickel targetsin Australia and Canada. Exploration for iron ore, coal and bauxite wasundertaken in a number of regions including Australia, India, Brazil and WestAfrica. EXPLORATION EXPENDITURE During the quarter, BHP Billiton spent US$36 million on minerals exploration, ofwhich US$35 million was expensed, and US$76 million on petroleum exploration, ofwhich US$25 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 4156email: [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 AfricaFrancis McAllister, Investor Relations Michael Campbell, Investor & Media RelationsTel: +1 713 961 8625 Mobile: +1 713 480 3699 Tel: +27 11 376 3360 Mobile: +27 82 458 2587email: [email protected] email: [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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