24th Oct 2006 07:01
BHP Billiton PLC24 October 2006 24 October 2006Number 28/06 BHP BILLITON QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT ACTIVITIES July 2006 - September 2006 This report covers exploration and development activities for the quarter ended30 September 2006. 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. Whilst the majority of BHP Billiton's projects remain broadly on schedule andbudget, tight labour markets and shortages of equipment and supplies continueacross the industry. These issues are particularly acute in Western Australiaand the Gulf of Mexico and continue to impact costs and schedules. 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. During the quarter,the facility sailed to its offshore field location and was permanently installedwith all of its 12 mooring lines connected. Six development wells were drilledand two were completed as at the end of September. This development will have agross nameplate daily capacity of 200,000 barrels of oil and 180 million cubicfeet of natural gas. A detailed review of cost estimates continues as theproject's schedule becomes more certain. Capital cost pressures are likely toresult in a capital cost increase of more than 30 per cent in excess of thecurrently approved budget. 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 Australia. Theproject includes the construction of a fifth liquefaction processing train witha gross annual capacity of 4.2 million tonnes, additional processing facilitiesand associated infrastructure. Civil engineering work is almost complete aheadof the scheduled mobilisation of the mechanical installation contractor on site.BHP Billiton's share of development costs, based on the operator's recentlyrevised estimate, has increased by 20 per cent to US$300 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 locatedin the Gulf of Mexico. The project includes the construction, installation andoperation of a stand-alone platform and the associated seven well subsea system.The facility will have a gross nameplate daily capacity of 50,000 barrels of oiland 50 million cubic feet of gas. During the quarter, batch setting operationsfor five new development wells were completed and fabrication of the hull andtopsides continued at construction yards in Texas and Louisiana respectively.Development costs are estimated at US$850 million (BHP Billiton share US$300million) with first production expected by the end of 2007. Stybarrow Development, Australia (BHP Billiton 50%, operated) In November 2005, BHP Billiton approved the Stybarrow oil field developmentlocated off the north-west coast of Australia. The project involves a subseadevelopment and a Floating Production Storage and Offtake (FPSO) facility with agross daily capacity of approximately 80,000 barrels of liquids, which will beprovided under a 10 year service agreement. During the quarter, the first subseasystem was received and drilling of the first well commenced. Topsidesfabrication in Singapore is progressing on schedule. Project costs are estimatedat US$600 million (BHP Billiton share US$300 million). First production isexpected during the first quarter of 2008. North West Shelf Angel Development, Australia (BHP Billiton 16.67%,non-operated) In December 2005, BHP Billiton approved the development of the North West ShelfVenture's Angel gas and condensate field off the north-west coast of Australia.The project involves the installation of the Venture's third major offshoreproduction platform and associated infrastructure, including a new subsea 50kilometre pipeline which will be tied into the North Rankin platform.Hydrocarbons will be produced through one processing unit with a gross dailycapacity of up to 800 million standard cubic feet of gas and associatedcondensate. During the quarter, fabrication of the jacket and topsidescommenced. BHP Billiton's share of development costs, based on the operator'sestimate, is approximately US$200 million. The development is expected to befully operational by the end of 2008. Shenzi Development, Gulf of Mexico, USA (BHP Billiton 44%, operated) In June 2006, BHP Billiton approved the development of the Shenzi oil and gasfield located in the Gulf of Mexico. The project includes the construction,installation and operation of a stand-alone platform and the associated subseasystem. Initial field development will consist of seven producing wells and thefull field development is expected to have up to 15 wells. The facility willhave a gross nameplate daily capacity of 100,000 barrels of oil and 50 millioncubic feet of gas. During the quarter drilling of the development wellscommenced as did fabrication of the topsides and hull. Gross costs for the fullfield development through 2015 are estimated at US$4.4 billion (BHP Billitonshare US$1.94 billion) with first production expected by mid 2009. MINERALS DEVELOPMENT Aluminium Alumar Refinery expansion, Brazil (BHP Billiton 36%, non-operated) The Alumar Refinery expansion was approved in December 2005 with a budget ofUS$518 million (BHP Billiton share) and an expected commissioning date of mid2008. The project includes upgrades to the existing production unit andduplication of the upgraded line. Alumina capacity will increase by 2 milliontonnes per annum to 3.5 million tonnes per annum. Detailed engineering is now 50per cent complete. Base Metals Spence, Chile (BHP Billiton 100%) 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. Duringthe quarter, the mine pre-strip was completed on schedule. Low grade oxidemineralisation continued to be placed on the dump leach pad and oxide ore is nowavailable to feed the crusher. Electrical and plant piping installation isnearing completion and pre-commissioning testing is continuing with the projecton schedule to commence production in the current quarter. The project remainswithin the budget of US$990 million excluding the foreign exchange impacts of astronger Chilean peso. Carbon Steel Materials Rapid Growth Project 3, Australia (BHP Billiton 85%, operated) The Rapid Growth Project 3 (RGP3) was approved in October 2005. The project willcomprise expansions to mine, rail and port facilities. Installed capacity atWestern Australian Iron Ore's Area C mine will increase by 20 million tonnes perannum by the fourth quarter of 2007, and the project will also deliver somelatent capacity at the port to be utilised in future expansions. Engineering isessentially complete, and all major orders and contracts have now been let.Construction at Area C is currently focused on concrete works and the first newrail sidings are now operational. The demolition of the old Goldsworthyfacilities in Port Hedland, together with the upgrade of the associated berthcommenced on 1 September as planned. Development costs are estimated at US$1.5billion (US$1.3 billion BHP Billiton share). Samarco Third Pellet Plant Project, Brazil (BHP Billiton 50%, non-operated) The Samarco Third Pellet Plant Project was approved in October 2005. The projectwill increase annual iron ore pellet production capacity by 7.6 million tonnesto 21.6 million tonnes per annum (100% basis). The new facilities will includeadditional mining capacity and a new concentrator at the Germano site, a 400kilometre slurry pipeline from Germano to Ponta Ubu, a third pellet plant,additional stockyard and enhanced ship loading capacity at the Ponta Ubu site.Detailed engineering is 70 per cent complete and all major equipment procurementand construction contracts have been awarded. Construction activities arecontinuing at Germano, Ubu and on the pipeline. The project budget is US$1.18billion (US$590 million BHP Billiton share). Production is scheduled to commenceduring the first half of 2008. Diamonds and Specialty Products Koala Underground Project, Canada (BHP Billiton 80%, operated) In June 2006, BHP Billiton approved the development of the third undergroundmine at the EKATI diamond mine in Canada. In addition to the mine development,the investment provides for mine ventilation systems, an underground conveyorconnecting to the existing Panda underground conveyor and minor surfaceinfrastructure and mobile equipment. The project will deliver a total of 10.6million dry tonnes of ore to the process plant and recover 9.8 million carats ofhigh quality Koala diamonds over an 11 year period. During the quarter,underground tunnelling continued and construction of the surface dewatering andmine ventilation facilities were initiated. Procurement is well advanced andengineering is proceeding to schedule. Total development costs are estimated atUS$250 million (BHP Billiton share US$200 million). First production is expectedin the last quarter of 2007. Stainless Steel Materials Ravensthorpe Nickel Project, Australia (BHP Billiton 100%) In August 2005, a revised budget of US$1,340 million was approved for theRavensthorpe Nickel Project. The project includes the development of a mine,treatment plant and associated infrastructure near Ravensthorpe in WesternAustralia. The Ravensthorpe processing plant will produce a mixed nickel-cobalthydroxide intermediate product (MHP). A detailed review of the cost estimate anddelivery schedule is continuing, however as previously reported, cost pressuresare likely to result in a capital cost increase of more than 30 per cent inexcess of the currently approved budget. Engineering and procurement activitiesare now finalised and construction progress is approximately 60 per centcomplete. The construction focus is now on mechanical, piping and electricalinstallation with 2,000 people currently working on site. The second autoclavehas been installed. Pre-commissioning and commissioning activities areprogressing and mining operations have commenced with the first blast occurringin September 2006. Yabulu Extension Project, Australia (BHP Billiton 100%) 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. Overall project progress is approximately 81 per cent complete.Following a review of project costs completed in August 2005, a revised budgetof US$460 million was approved. The project is on schedule and commissioningwill start ahead of delivery of feed from Ravensthorpe. PETROLEUM EXPLORATION Exploration and appraisal wells drilled during the quarter or in the process ofdrilling as at 30 September 2006. WELL LOCATION BHP BILLITON EQUITY STATUS Blackbeard West-1 Gulf of Mexico, 5% BHP Billiton; Temporarily abandoned. South Timbalier Block 168 Exxon operator Hydrocarbons encountered. Puma-2 Gulf of Mexico, 33.3% BHP Billiton; Operations temporarily Green Canyon BP operator suspended, rig released. Block 821 / 866 Ouachita-1 Gulf of Mexico, 16.875% BHP Billiton; Plugged and abandoned. Dry hole. Green Canyon Amerada Hess operator Block 376 Kingbird-1 Trinidad & Tobago, Block 30% BHP Billiton and Hydrocarbons encountered. Well 3(a) operator not tested. Ruby-1 Trinidad & Tobago, Block 25.5% BHP Billiton and Drilling ahead. 3(a) operator Brecknock-3 Browse Basin 8.33% BHP Billiton; Plugged and abandoned. Western Australia Woodside operator Successful appraisal. WA-32-R Pemberton-1 Dampier Sub-Basin 16.66% BHP Billiton; Plugged and abandoned. Western Australia Woodside operator Hydrocarbons encountered. WA-28-P Huntsman East-1 Beagle Sub-Basin 10.23% BHP Billiton; Plugged and abandoned. Dry hole. Western Australia Woodside operator WA-297-P MINERALS EXPLORATION BHP Billiton continued to pursue global exploration opportunities for keycommodities of interest utilising both in-house capabilities and the JuniorAlliance Programme. Grassroots exploration continued on diamond targets in Angola and Canada; oncopper targets in Mexico, Mongolia and the Democratic Republic of Congo; and onnickel targets in Australia and Russia. Exploration for iron ore, coal andbauxite was undertaken in a number of regions including Australia, Brazil andWest Africa. During the quarter, BHP Billiton spent US$51 million on minerals exploration,all of which was expensed. Petroleum exploration expenditure was US$79 million,of which US$65 million was expensed. Further information on BHP Billiton can be found on our Internet site:www.bhpbilliton.com Australia United KingdomSamantha Evans, Media Relations Mark Lidiard, Investor & Media RelationsTel: +61 3 9609 2898 Mobile: +61 400 693 915 Tel: +44 20 7802 4156 Mobile: +44 7769 934 942email: [email protected] email: [email protected] Belcher, Investor Relations Illtud Harri, Media RelationsTel: +61 3 9609 3952 Mobile: +61 417 031 653 Tel: +44 20 7802 4195 Mobile: +44 7920 237 246email: [email protected] email: [email protected] United States South AfricaTracey Whitehead, Investor & Media Relations Alison Gilbert, Investor RelationsTel: US +1 713 599 6100 or UK +44 20 7802 4031 Tel: SA +27 11 376 2121 or UK +44 20 7802 4183Mobile: +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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