Chevron plans record $5.9 bn spending program for 1997

Dec 22, 1996 01:00 AM

Chevron has announced a $5.9 bn capital and exploratory spending program for 1997, the largest in company history. The company also said that 1996 operational earnings are expected to reach a new record. During the year, the company achieved its highest level of liquids production in 10 years, and expects that additions to proved reserves of oil and gas will exceed its production for the year. Net liquids production during 1996 should reach 1.04 mmbpd. The biggest increase has come from the Tengiz Field in Kazakhstan, where field production is up from about 60,000 bpd at the beginning of the year to more than 160,000 bpd currently. Chevron has a 50 % equity stake in the Tengiz joint venture, which is working to expand field capacity to at least 180,000 bpd by year-end 1997. In addition to Tengiz, other areas which recently achieved all-time high production rates included Angola, Congo and Australia. Chevron plans to invest about $3.6 bn, or 60 % of the total capital program, in world-wide exploration and production. Consistent with the company's ongoing strategy to grow its international upstream business, $2.3 bn of these expenditures, up about 20 % from 1996, will be outside the United States. However, excellent opportunities also exist in the United States, and the company will invest about $1.3 bn in US exploration and production, up 15 % from 1996.
The world-wide exploration and production program includes major projects in:

  • The US Gulf of Mexico, following highly successful lease acquisitions and promising drilling results. Chevron is strongly positioned to expand in deep water. The recently announced Genesis project, featuring a production platform in water a half-mile deep, will be a stepping stone for Chevron's aggressive Gulf exploration program.
  • Kazakhstan, where development of the Tengiz field will continue in parallel with construction of a pipeline for export of Tengiz crude. Chevron recently acquired a 15 % stake in the Caspian Pipeline Consortium.
  • The UK North Sea, where the Britannia field is scheduled to come onstream in 1998. Production is expected to peak in 1999 at 740 mmcf of gas and 70,000 bpd of condensate. Chevron's equity interest is just over 30 %.
  • Canada, where development of the large Hibernia project offshore Newfoundland is ahead of schedule. First oil production is expected in late 1997.

For world-wide refining, marketing and transportation, Chevron plans to invest about $1.4 bn. About $600 mm will be spent in the United States, mainly for Chevron's "Customer Driven" marketing strategies, such as the McDonald's alliance. Chevron refining, marketing and transportation investment outside the United States will be about $800 mm, approximately equal to 1996 spending. These expenditures will fund continued expansion by Caltex, Chevron's 50-%-owned affiliate that operates in the Eastern Hemisphere. Over two thirds of Caltex investments will finance retail market projects, as Caltex seeks to build aggressively on strong positions in rapidly growing Pacific Rim markets.
Chevron plans to invest almost $700 mm in the world-wide chemicals business in 1997, up about 30 % from 1996. Expenditures in 1997 will include a paraxylene expansion at the Pascagoula refinery and a lubricating oil and fuel additives manufacturing plant in Singapore. Both projects are scheduled for start-up in 1998. The company is also evaluating other attractive international projects.

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