24th Jan 2006 07:00
BHP Billiton PLC24 January 2006 24 January 2006Number 02/06 BHP BILLITON QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT ACTIVITIES October 2005 - December 2005 This report covers exploration and development activities for the quarter ended31 December 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. Industry wide, the supply side response to continued strong global demand forraw materials remains constrained by a shortage of people, equipment andsupplies. This has led to tight labour markets and difficulty in sourcingconstruction and drilling plant and machinery, which in turn has led to risinginput costs. Currency strength against the US dollar is also adding furtherpressure. These conditions, which are currently particularly acute in Australiaand the Gulf of Mexico, continue to challenge the ability of BHP Billiton todeliver development projects to budget. Despite these pressures, all projectscurrently remain on or ahead of schedule, with the Atlantis South schedule underreview following the recent hurricanes in the Gulf of Mexico. During the quarter, the Board approved the Rapid Growth Project 3 expansion atWestern Australia Iron Ore (Australia), the Third Pellet Plant expansion atSamarco (Brazil), the Stybarrow and NWS Angel Petroleum developments (bothAustralia) and the Alumar Refinery expansion (Brazil). 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. Preparation for drilling of the development wells commenced, as didinstallation of the flowlines that will connect the Atlantis productionfacilities to the Caesar and Cleopatra pipeline system. The recent hurricanes inthe Gulf of Mexico have impacted the availability of equipment required to allowfor completion on schedule in the third quarter of 2006. As a result, theproject schedule remains under review. 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. Engineering and procurement activities arecontinuing and construction of pre-assembly units has commenced. A number ofmajor construction contracts were also awarded during the quarter. BHPBilliton's share of development costs, based on the operator's estimate, isapproximately US$250 million. First production 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 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. During the quarter, design, engineeringand manufacture of the subsea equipment continued, whilst contractual activityfocused on the finalisation of key offshore installation contracts. Developmentcosts are estimated at US$850 million (BHP Billiton share US$300 million) withfirst 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) facilitycapable of producing approximately 80,000 barrels of liquids a day (100% basis),which will be provided under a 10 year minimum service agreement. Detaileddesign is underway and major equipment and fabrication contracts have beenplaced. Project costs are estimated at approximately US$600 million (BHPBilliton share approximately US$300 million) and first production is expectedduring 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. Detailed design commenced during the quarter and the topsidesinstallation contract has been awarded. BHP Billiton's share of developmentcosts, based on the operator's estimate, is approximately US$200 million. Thedevelopment is expected to be fully operational by the end of 2008. MINERALS DEVELOPMENT AluminiumWorsley 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 to 3.5 million tonnes per annum (100%basis). Construction activity is nearing completion. Commissioning will begin inthe first quarter of 2006. Alumar Refinery expansion, Brazil (BHP Billiton 36%) The Alumar Refinery expansion was approved in December 2005 with a budget ofUS$518 million (BHP Billiton share). The project includes upgrades to theexisting production unit and duplication of the upgraded line and will increasealumina capacity by 2 million tonnes per annum to 3.5 million tonnes per annum(100% basis). Detailed engineering, procurement and construction of temporarysite facilities commenced during the quarter. Commissioning is expected to becompleted in mid calendar year 2008 Base Metals 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 20 million tonnes of ore being delivered to the pad to date.Permanent power is now available on site and construction of the inoculationplant has commenced. Structural steel erection, piping and mechanicalinstallation in the solvent extraction, electrowinning and desalination plantsalso continued during the quarter. A project budget of US$870 million (US$500million BHP Billiton share) was approved by the Board. Production is scheduledto 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. Duringthe quarter, major equipment and bulk materials continued to arrive on site andmine pre-strip operations proceeded to schedule. Construction of the mine andadministration infrastructure is complete. Concrete work in all areas of theprocess plant is almost complete and liner placement for the heaps and ponds iscontinuing. Mechanical and structural works have also commenced and all majorconstruction contracts have been awarded. The project budget is US$990 million.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 with a budget ofUS$575 million (BHP Billiton share US$489 million). The project comprisesincreases in mine, rail and port capacity through the development of Ore Body18, purchase of additional rolling stock and a new car dumper at FinucaneIsland. Site activities are proceeding to schedule and construction activitiescontinue to focus on preparation for initial commissioning activities. Theproject 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, related to the Rapid Growth Project 3). Rapid Growth Project 3, Australia (BHP Billiton 85%) 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. Initialengineering activities and early procurement works are proceeding to plan.Development costs are estimated at US$1.5 billion (US$1.3 billion BHP Billitonshare). Samarco Third Pellet Plant Project, Brazil (BHP Billiton 50%) 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 Ponte Ubu and a third pellet plant,additional stockyard and enhanced shiploading capacity at the Ponta Ubu site.Detailed engineering, procurement and initial construction activities havecommenced. The project budget is US$1.18 billion (US$590 million BHP Billitonshare). Production is scheduled to commence during the first half of 2008. 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). Engineering,procurement, off site fabrication and infrastructure activities are allproceeding to schedule. On site, thickener and tank construction is welladvanced and the acid plant construction is proceeding to schedule. Following areview of project costs completed in August 2005, a revised budget of US$1,340million was approved. The first shipment of MHP remains on schedule for thesecond quarter of 2007. 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 continue to proceed to schedule,work is underway on the two major vertical packages and structural steelfabrication has commenced. Following a review of project costs completed inAugust 2005, a revised budget of US$460 million was approved. First nickel metalproduction from the expanded Yabulu refinery is on schedule for the thirdquarter of 2007. PETROLEUM EXPLORATION Exploration and appraisal wells drilled during the quarter or in the process ofdrilling as at 31 December 2005. WELL LOCATION BHP BILLITON STATUS EQUITY Mad Dog Gulf of 23.9% BHP Hydrocarbons encountered.Deep Mexico, Billiton; Plugged and abandoned. Green Canyon BP operator 826 Blackbeard Gulf of 5% BHP Drilling ahead.West Mexico, Billiton; South Exxon operator Timbalier Block 168 Cascade-2 Gulf of 50% BHP Hydrocarbons encountered. Mexico, Billiton and Plugged and abandoned. Walker Ridge operator 206 Knotty Head Gulf of 25% BHP Hydrocarbons encountered.1 Mexico, Billiton; See News Release of 20 December Green Canyon Unocal operator 2005. Sidetrack drilling ahead. 512 Bonsai Gulf of 34% BHP Hydrocarbons encountered. Mexico, Billiton; Plugged and abandoned. Atwater BP operator Valley 398 Puma-2 Gulf of 33.3% BHP Temporarily suspended. Mexico, Billiton; Rig currently in shipyard for Green Canyon BP operator repairs. 206 Everest Gulf of 34% BHP Drilling ahead. Mexico, Billiton; Atwater BP operator Valley 272 Brecknock-2 Western 8.33% BHP Hydrocarbons encountered. Australia, Billiton; Plugged and abandoned Browse Basin Woodside WA-32-R operator Calliance-1 Western 20% BHP Hydrocarbons encountered. Australia, Billiton; Plugged and abandoned Browse Basin Woodside WA-32-R operator Davan-1 UK North Sea, 35% BHP Drilling ahead. Block 9 / Billiton; 5a-4 Total operator MINERALS EXPLORATION BHP Billiton continued to pursue global exploration opportunities for keycommodities of interest utilising both in-house capabilities and the JuniorAlliance Programme. Exploration continued on diamond targets in Canada, Angola and Botswana; onporphyry copper targets in Chile, Peru and the Democratic Republic of Congo; andon nickel targets in Australia. Exploration for iron ore, coal and bauxite wasundertaken in a number of regions including Australia, Brazil and West Africa. EXPLORATION EXPENDITURE During the six months ended 31 December 2005, BHP Billiton spent US$99 millionon minerals exploration, of which US$96 million was expensed, and US$251 millionon petroleum exploration, of which US$123 million was expensed. ****Further information on BHP Billiton can be found on our Internet site:www.bhpbilliton.com Australia United KingdomJane Belcher, Mark Lidiard,Investor Relations Investor & Media RelationsTel: +61 3 9609 3952 Tel: +44 20 7802 4156Mobile: +61 417 031 653 Mobile: +44 7769 934 942email: [email protected] email: [email protected] Samantha Evans, Ariane Gentil,Media Relations Media RelationsTel: +61 3 9609 2898 Tel: +44 20 7802 4177Mobile: +61 400 693 915 Mobile: +44 78 81 51 8715email: [email protected] email: [email protected] States South Africa Tracey Whitehead, Alison Gilbert,Investor & Media Relations Investor RelationsTel: US +1 713 599 6100 or Tel: +27 11 376 3360 orUK +44 20 7802 4031 UK: +44 20 7802 4183Mobile: +44 7917 648 093 Mobile: +44 7769 936 227email: email:[email protected] [email protected] BHP Billiton Limited BHP Billiton PlcABN 49 004 028 077 Registration number 3196209Registered in Australia Registered in England and WalesRegistered Office: Registered Office:Level 27, Neathouse Place180 Lonsdale Street LondonMelbourne SW1V 1BHVictoria 3000 United KingdomTelephone +61 1300 554 757 Telephone +44 20 7802 4000Facsimile +61 3 9609 3015 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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