Credit Suisse Vertical Tour


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Credit Suisse Vertical Tour

  1. 1. Deep Water Gulf of Mexico Brian Smith General Manager, Major Capital Projects James Cearley General Manager, Exploration Deep Water Exploration & Projects Chevron North America Exploration and Production Credit Suisse Investor Group, St. Regis Hotel, Houston November 20th, 2008 © Chevron 2007
  2. 2. Cautionary Statement CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This presentation of Chevron Corporation contains forward-looking statements relating to Chevron’s operations that are based on management’s current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “budgets” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are crude oil and natural gas prices; refining margins and marketing margins; chemicals prices and margins; actions of competitors; timing of exploration expenses; the competitiveness of alternate energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s net production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude-oil production quotas that might be imposed by OPEC (Organization of Petroleum Exporting Countries); the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental statutes, regulations and litigation; the potential liability resulting from pending or future litigation; the company’s acquisition or disposition of assets; gains and losses from asset dispositions or impairments; government-mandated sales, divestitures, recapitalizations, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading “Risk Factors” on pages 32 and 33 of the company’s 2007 Annual Report on Form 10-K/A. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed in this presentation could also have material adverse effects on forward-looking statements. U.S. Securities and Exchange Commission (SEC) rules permit oil and gas companies to disclose only proved reserves in their filings with the SEC. Certain terms, such as “resources,” “undeveloped gas resources,” “oil in place,” “recoverable reserves,” and “recoverable resources,” among others, may be used in this presentation to describe certain oil and gas properties that are not permitted to be used in filings with the SEC. In addition, SEC regulations define oil-sands reserves as mining-related and not a part of conventional oil and gas reserves. 2 © Chevron 2008
  3. 3. Why Deep Water? Future oil demand is likely to remain strong Deep water is where the remaining big reserves are located Deep water drilling will account for 25% of Global Deepwater offshore oil production by 2015, compared to just 9% now Innovative technologies will allow economic developments 3 © Chevron 2008
  4. 4. Chevron Manages a World-Class Portfolio of Projects and Deepwater Operations Faroes Canada U.S.A. Philippines Nigeria Australia Angola Brazil Chevron’s Major Deepwater Operations 4 © Chevron 2008
  5. 5. Chevron Manages a World-Class Portfolio of Projects and Deepwater Operations • TCO SGI/SGP Faroes • Karachaganak Amauligak II & III • Tahiti • ACG I-III • Perdido AOSP Expansion • Jack Canada Piceance Basin • St. Malo • Blind Faith U.S.A. North Duri Philippines • Agbami Plataforma Deltana Nigeria • Gehem • Nigeria Australia EGTL • Gendalo Angola • Usan • Frade • Nsiko Brazil • Tombua • Papa-Terra BC-20 • Bonga Landana SW/ • Gorgon • BBLT Aparo • Wheatstone • Angola • Olokola LNG LNG Chevron’s Major Deepwater Capital Projects • Chad Projects shown are >$1Billion C&E net Chevron share except for BBLT 5 © Chevron 2008
  6. 6. Industry Production from Deep Water is Moving Deeper at an Increasing Pace '50-'54 '90-'94 '55-'59 '60-'64 '65-'69 '85-'89 ’00-’05 '95-‘99 '75-'79 '70-'74 '80-'84 0 1500 Production Water Depth (f) 3000 Exploration 4500 1,680’ 6000 1,063’ 1,472’ 7500 9000 Empire 10,500 Compliant Eiffel State Tower Tower Building 11,300 6 © Chevron 2008
  7. 7. Technology is Pushing the Envelope on Water Depths Under 4,000’ of water and five miles below the seabed “Tahiti” Gulf of Mexico Drilling in depths that only yesterday seemed impossible… 7 © Chevron 2008
  8. 8. Deep Water Gulf of Mexico Technical Challenges in Drilling Storms and hurricanes Sea Level Loop and eddy currents cause vortex induced vibrations and Empire State Gulf of motions to drill strings Building ~500 Mexico Meters Unpredictable high pressure gas 8,000’ charged stringers and faults Suprasalt Sediment near surface Mobile/flow-able/dissolvable 10,000’ thick salt canopy with Allochthonous Sigsbee 16,000’ Salt Canopy unpredictable layers of highly variable trapped sediments Unpredictable base of salt – Upper Tertiary rapid pressure differentials 24,000’ Sediments “Thief zones” of significantly lower pressure which cause lost circulation – fluid loss Lower Tertiary 32,000’ Cretaceous Ultra-deep reservoir with high temperatures, high pressures Autochthonous Salt and low natural flow-ability Basement 40,000’ 8 © Chevron 2008
  9. 9. Deep Water Gulf of Mexico GOM Deepwater Well Complexity A Bird’s Eye View Gulf of Mexico Deepwater Conventional Deepwater Casing Program: Casing Program: 36” – 7 3/4” 30” – 7” 9 © Chevron 2008
  10. 10. Chevron continues to have a strong position in Deep Water discovered fields 1000 Top 50 Gulf of Mexico Deep Water Fields 900 Field size distribution from Wood Mackenzie database 800 Chevron Interest 700 600 Great White MMBOE Knotty Head Tahiti 500 Mad Dog St. Malo Tubular Bells Jack 400 Big Foot Petronius 300 Blind Faith Genesis Puma Gotcha 200 Trident Tonga K2 100 0 10 © Chevron 2008
  11. 11. Chevron’s Deepwater Gulf of Mexico Portfolio Tahiti Development Blind Faith Development Perdido Fold Belt Development Jack Discovery New Orleans Houston Blind Faith Tubular Bells Tahiti Knotty Head Puma Tonga Big Foot Perdido St. Malo Jack 11 © Chevron 2008 Exploration Appraisal Major Capital Projects 2007 -2010
  12. 12. Major Capital Projects – Gulf of Mexico Tahiti Field Development CVX operated (58%) Total capital: $4.7 Billion Field Development with Spar and Drill Centers 2 subsea drill centers producing to a truss Spar Water Depth: 4000’ 125 MBOPD/70 MMCFD peak production 400-500 MMBOE potentially recoverable Current Activity: Hull and Topsides installed. HUC underway 12 © Chevron 2008
  13. 13. Major Capital Projects – Gulf of Mexico Tahiti Spar Transported to Texas 13 © Chevron 2008
  14. 14. Major Capital Projects – Gulf of Mexico Tahiti Spar Transported Offshore and Uprighted 14 © Chevron 2008
  15. 15. Major Capital Projects – Gulf of Mexico Topsides Installation Completed August 8th, 2008 15 © Chevron 2008
  16. 16. Major Capital Projects – Gulf of Mexico Blind Faith Project Topsides construction, Louisiana New Orleans Blind Faith Tahiti Perdido Fold Belt CVX operated (75%) Subsea wells producing to a Hull fabrication, Finland Semi-submersible facility Water Depth: 7,000’ 60 MBOPD/60 MMCFD peak production First Oil: 2008 100 MMBOE potentially recoverable 16 © Chevron 2008
  17. 17. Topsides Lift at Kiewit 17 © Chevron 2008
  18. 18. Blind Faith – Ready to Leave Kiewit 18 © Chevron 2008
  19. 19. Blind Faith – Under Tow, on Location, control room and first oil 19 © Chevron 2008
  20. 20. Perdido Regional New Development Orleans Blind Faith Tahiti Perdido Fold Belt Whale (Explor) Chevron = 100% Silvertip Chevron = 60% Shell(Op) • Chevron has interest in multiple discoveries and in the Regional Development Host Whale • 8,000’- 9,500’ water depth Perdido Regional Silvertip ’ Host & • 215 miles to shore Export Pipeline • 65 miles to nearest infrastructure AC 856 • Development drilling and Tobago Total/Nexen ,,,, facilities fabrication underway Trident Great White Great White Trident Tobago Chevron = 33.3% Chevron (Op) = 70% Chevron = 57.5% Shell(Op), BP Statoil, ENI, Devon Shell(Op), Nexen 20 © Chevron 2008
  21. 21. Perdido Fields Layout Key Features : • Well Count Silvertip •26 Producers Regional Direct •5 Injectors Vertical Access Host • Name Plate Capacity •100,000 BOPD •200 MMCFPD •40,000 BWPD •80,000 BWPD Water Injection Subsea Separator/Boosting System (SBS) Water injectors Tobago Frio Pilot Southwest Cluster 21 © Chevron 2008
  22. 22. Perdido Hull Offshore 22 © Chevron 2008
  23. 23. Miocene & Lower Tertiary Discoveries in the Deepwater Gulf of Mexico 23 © Chevron 2008
  24. 24. Emerging Lower Tertiary Trend Jack #2 Well Test Results Drilled to a total depth of 28,175 feet Completed and tested in 7,000 feet of water, and more than 20,000 feet under the sea floor During the test, sustained a flow rate of more than 6,000 barrels of crude oil per day Testing represented approximately 40 percent of the total net pay measured in the well 24 © Chevron 2008
  25. 25. Deep Water GOM Wells are among the Most Technically Challenging in the World Examples where we push the envelope… Deepest successful well test in the U.S. Gulf of Mexico with Jack 2 (28,175’), a well situated in 7,000 feet (2,135 meters) of water and extending more than 20,000 feet (6,100 meters) beneath the seafloor New drilling depth record (34,189’) for the U.S. Gulf of Mexico at Knotty Head World record for successfully drilling a well in the deepest water depth (10,011’) in the Perdido Fold Belt 25 © Chevron 2008
  26. 26. Success Requires Expertise in Critical Technologies Challenge Technology Regional Geology Extensive Salt Canopy Seismic Imaging Structural Complexity Drilling Few Wells 6,000’ (1800 m) 7,500’ (2300 m) US 10000’ (3000 m) m) Mexico 00 ’ (4 00 13 26 © Chevron 2008
  27. 27. Development Scale Subsalt Imaging Detailed velocity modeling results in significantly improved images Regional Velocity Model Development Scale Velocity Model Data Courtesy of WesternGeco The latest seismic acquisition technologies, analysis of the sediment velocity field and detailed salt modeling are key to delivering high quality images in the Deepwater. 27 © Chevron 2008
  28. 28. Deep Water Drilling & Completions Meeting Future Technology Challenges Drilling and completions technology Integrated technology solution Seismic imaging Reservoir modeling Rock mechanics Drilling operations Real-time monitoring Live video camera and feed from rig 28 © Chevron 2008
  29. 29. Deep Water Technology Breakthrough New Deep Water Drillship Most advanced drilling capabilities Dynamically positioned, with double-hull Two drilling systems in a single derrick Stronger and more efficient top drive so wells can be drilled deeper Other unique features will Transocean’s Discoverer Clear Leader target drilling wells up to 40,000 feet of total depth Variable deckload of over 20,000 metric tons; capable of drilling in water depths of up to 12,000 feet 29 © Chevron 2008
  30. 30. Deep Water Facilities/Infrastructure Meeting Future Technology Challenges Future Floating Production System Model Compliant Tower ~500 Meters Reliability of Facilities/Systems Flow Assurance of Product Long Distance Tiebacks Well Intervention Cost Reduction 30 © Chevron 2008
  31. 31. Summary Deepwater is a complex, risky, and costly environment. Many technical challenges remain to be solved. The industry is focused on finding solutions and providing the needed creativity and collaboration. Capable People World Class Safety Performance Innovative Technology Strong Partnerships 31 © Chevron 2008
  32. 32. 32 © Chevron 2008