26th Apr 2006 07:00
BHP Billiton PLC26 April 2006 26 April 2006Number 09/06 BHP BILLITON QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT ACTIVITIES January 2006 - March 2006 This report covers exploration and development activities for the quarter ended31 March 2006. Unless otherwise stated, BHP Billiton's interest in the projectsreferred to in this report is 100 per cent, and references to project schedulesare based on calendar years. During the quarter, the Company saw no easing of the industry wide pressuresthat have been placing constraints on the supply side's response to continuedstrong global demand for raw materials. A shortage of people, equipment andsupplies has led to tight labour markets and difficulty in sourcing constructionand drilling plant and machinery, which in turn has led to rising input costs.Currency strength against the US dollar has also added further pressure. Theseconditions, which are currently particularly acute in Australia and the Gulf ofMexico, continue to challenge the ability of BHP Billiton to deliver developmentprojects to budget. Despite these pressures, most projects currently remain onor ahead of schedule, with the Atlantis South schedule remaining under reviewfollowing last year's hurricane activity in the Gulf of Mexico, and minorschedule delays with certain projects in Western Australia. 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 flowlinesconnecting the Atlantis production facilities to the Caesar and Cleopatrapipeline system were installed. Drilling of the development wells commenced withthe dedicated rig completing one well and commencing work on the second duringthe period. Integration work continued on the Atlantis production facility atconstruction yards in Texas, USA. Last year's hurricanes impacted theavailability of equipment required to allow for project completion. The projectschedule 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 arenearing completion and most major construction contracts have been awarded. Theconstruction of pre-assembly units is progressing to plan. BHP Billiton's shareof development 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 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, constructioncontinued on the facility's topsides at fabrication yards in Louisiana, USA. Themain framing was completed and installation of the deck plate commenced. Hullfabrication is underway and drilling plans are being finalised. 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 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 FPSOservices contract was executed, and the manufacture of major equipmentcommenced. Project costs are estimated at US$600 million (BHP Billiton shareapproximately US$300 million). First production is expected during the firstquarter 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 west coast of Australia. Theproject 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 continued during the quarter and the jacket andtopside fabrication contracts were 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 Aluminium Worsley Development Capital Projects (DCP), Australia (BHP Billiton 86%) The Worsley Alumina DCP was approved in May 2004 with a budget of US$192 million(US$165 million BHP Billiton share). The projects will increase alumina capacityby 250,000 tonnes per annum (215,000 tonnes per annum BHP Billiton share) to acapacity of 3.5 million tonnes per annum (3.01 million tonnes per annum BHPBilliton share). Commissioning activities commenced on schedule during thequarter with 44 of 71 packages of work now complete and handed over tooperations. 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). During the quarter, detailed engineering and procurement work andconstruction of temporary site facilities continued and civil works of permanentfacilities commenced. Commissioning is expected to be completed in the middle of2008. 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 on lowgrade 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, leach pad irrigation commenced andore stacking continued with approximately 32 million tonnes of ore beingdelivered to the pad to date. Structural steel erection, electrical,instrumentation, piping and mechanical installation in the solvent extraction,electrowinning and desalination plants continued. A project budget of US$870million (US$500 million BHP Billiton share) was approved by the Board.Production 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. Duringthe quarter, the majority of the equipment and bulk materials arrived on siteand mine pre-strip operations proceeded to schedule. The initial stage of thedump leach pad was completed and the first low grade oxide mineralisation wasencountered as expected in the open pit. Concrete work in all areas of theprocess plant is effectively complete and liner placement for the heaps andponds is continuing. Mechanical and structural erection works continue with allmajor equipment now in place. Electrical and plant piping contractors have alsocommenced work. The project budget is US$990 million. Production is scheduled tobegin 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, construction progress iswell advanced and all plans for commissioning are in place. The project willincrease installed capacity at Western Australian Iron Ore by 8 million tonnesper annum by the second half of 2006 (this will be offset by an 8 million tonnesper annum reduction in capacity due to the suspension of the Goldsworthy shiploading operations at Finucane Island in the third quarter of 2006, related tothe 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. Engineeringactivities are well advanced and procurement works are continuing to plan.Initial construction works have commenced at mine, port and rail sites.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, a400-kilometre slurry pipeline from Germano to Ponta Ubu and a third pelletplant, additional stockyard and enhanced shiploading capacity at the Ponta Ubusite. During the quarter, the majority of the equipment supply contracts wereawarded and delivery of pipes to locations along the pipeline route inpreparation for installation commenced. The project budget is US$1.18 billion(US$590 million BHP Billiton share). Production is scheduled to commence duringthe 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 continue toproceed to schedule. Key milestones achieved during the quarter include erectionof the acid plant stack, mobilisation of the first mechanical and pipinginstallation contractor and placement of the first flash vessels in the pressureacid leach area. The project is approximately 60 per cent complete. Following areview of project costs completed in August 2005, a revised budget of US$1,340million was approved. 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. Construction is underway with major subcontractors for civil works andmechanical and piping mobilised to site. The project is approximately 47 percent complete. Following a review of project costs completed in August 2005, arevised budget of US$460 million was approved. First nickel metal productionfrom the expanded 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 31 March 2006. WELL LOCATION BHP BILLITON EQUITY STATUS Blackbeard West Gulf of Mexico, 5% BHP Billiton; Drilling ahead. South Timbalier Exxon operator Block 168 Knotty Head 1 Gulf of Mexico, 25% BHP Billiton; Successful appraisal of Green Canyon 512 Nexen operator side track well. See News Release of 20 December 2005. Puma-2 & 3 Gulf of Mexico, 33.3% BHP Billiton; Puma 2 temporarily Green Canyon 821 / BP operator suspended. Rig 866 undergoing repairs. Puma 3 surface casing set. Everest Gulf of Mexico, 34% BHP Billiton; Plugged and abandoned. Atwater Valley 272 BP operator Dry hole. Ouachita-1 Gulf of Mexico, 16.875% BHP Drilling ahead. Green Canyon 376 Billiton; Amerada Hess operator Davan-1 UK North Sea 35% BHP Billiton; Plugged and abandoned. Block 9 / 5a-4 Total operator Results being evaluated. Jacala-1 Western Australia 55% BHP Billiton and Dry hole. Plugged and Exmouth sub-basin operator abandoned. WA-351-P 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 the DemocraticRepublic of Congo (DRC); on copper targets in Mongolia, the DRC and Mexico; andon nickel targets in Australia, Botswana and China. Exploration for iron ore,coal and bauxite was undertaken in a number of regions including Australia, EastAsia, South America and West Africa. EXPLORATION EXPENDITURE During the nine months ended 31 March 2006, BHP Billiton spent US$154 million onminerals exploration, of which US$150 million was expensed, and US$332 millionon petroleum exploration, of which US$162 million was expensed. **** Further information on BHP Billiton can be found on our Internet site:www.bhpbilliton.comAustralia United Kingdom Jane Belcher, Investor Relations Mark Lidiard, Investor & MediaTel: +61 3 9609 3952 Mobile: +61 Relations 417 031 653 Tel: +44 20 7802 4156 Mobile: email: +44 7769 934 942 [email protected] email: [email protected] Samantha Evans, Media Relations Illtud Harri, Media Relations Tel: +61 3 9609 2898 Mobile: +61 Tel: +44 20 7802 4195 Mobile: 400 693 915 +44 7920 237 246 email: email: [email protected] [email protected] United States South Africa Tracey Whitehead, Investor & Alison Gilbert, Investor Media Relations Relations Tel: US +1 713 599 6100 or UK Tel: SA +27 11 376 2121 or UK +44 20 7802 4031 +44 20 7802 4183 Mobile: +44 7917 648 093 email: email: [email protected]@bhpbilliton.com BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number 3196209 Registered in Australia Registered in England and Wales Registered Office: Level 27, 180 Lonsdale Street Registered Office: Neathouse Place London SW1V 1BH Melbourne Victoria 3000 United Kingdom Telephone +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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