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Bhp Billiton Plc - Bhp Billiton quarterly report on exploration and development
activities April 2005 - June 2005
Bhp Billiton Plc
Share Code: BIL
Share: GB0000566504
28 July 2005
Number: 31/05
BHP BILLITON QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT ACTIVITIES
April 2005 - June 2005
This report covers exploration and development activities for the quarter ended
30 June 2005. Unless otherwise stated, BHP Billiton`s interest in the projects
referred to in this report is 100 per cent, and references to quarters are based
on calendar years.
As highlighted in last quarter`s report, global demand for raw materials remains
strong and the consequent increased project construction activity across the
industry continues to drive tight labour markets and increasing input costs,
with a weak US dollar adding further cost pressure. These pressures are
particularly acute in Australia. In this environment, BHP Billiton remains
committed to working with its suppliers, contractors and other stakeholders to
mitigate the effect of these cost pressures where possible. However, some BHP
Billiton projects are expected to run over original Board approved budgets and
cost reviews are being conducted at some projects. Despite these challenging
conditions, all of our projects are tracking in line or ahead of schedule.
Two projects were commissioned during the quarter, Dendrobium (Australia) and
Panda Underground (Canada), bringing to eight the total commissioned during the
2005 financial year.
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 for
the development of the Atlantis South oil and gas reserves. The Atlantis South
development will have a gross nameplate daily capacity of 200,000 barrels of oil
and 180 million cubic feet of natural gas. During the quarter the production
platform`s hull and topsides facilities were delivered to the construction yards
in Texas, USA and integration work has commenced. The project remains on
schedule for first production in the third quarter of 2006.
North West Shelf expansion, Australia (BHP Billiton 16.67%, non-operated)
In June 2005, BHP Billiton announced the approval of an expansion to the
liquefied natural gas (LNG) processing facilities at the North West Shelf
Project in Western Australia. The project includes the construction of a fifth
liquefaction processing train with a gross capacity of 4.2 million tonnes per
annum, additional processing facilities and associated infrastructure. At its
completion, the expansion will increase the gross production capacity of the
North West Shelf Project to 15.9 million tonnes of LNG per annum. The
engineering, procurement and construction management contracts have been let and
engineering and procurement activities are underway. BHP Billiton`s share of
development costs, based on the operator`s estimate, is approximately 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 announced the approval of the Neptune oil and gas
development in the Gulf of Mexico. The project includes the construction,
installation, and operation of a stand-alone platform and associated subsea
system with seven wells. The facility will have a gross nameplate daily capacity
of 50,000 barrels of oil and 50 million cubic feet of gas per day. Detailed
design is underway and major equipment and fabrication contracts have been
placed. Development costs are estimated at US$850 million (BHP Billiton share
US$300 million) with first production expected by the end of 2007.
MINERALS DEVELOPMENT
Aluminium
Worsley Development Capital Projects (DCP), Australia (BHP Billiton 86%)
The Worsley Alumina DCP were approved in May 2004 with a budget of US$192
million (US$165 million BHP Billiton share). The projects will increase alumina
capacity by 250,000 tonnes per annum (215,000 tonnes per annum BHP Billiton
share) to a capacity of 3.5 million tonnes per annum (3.01 million tonnes per
annum BHP Billiton share). Overall the projects are greater than 48 per cent
complete. Engineering and procurement activities are substantially complete and
construction activities are progressing, with all major contractors now
mobilised and working on site. Commissioning of the DCP is scheduled for the
first quarter of 2006.
Base Metals
Escondida Norte, Chile (BHP Billiton 57.5%)
The development of the Escondida Norte pit, located approximately 5 kilometres
north of the existing Escondida mining operations, was approved in June 2003.
Pre-mine waste stripping continued during the quarter with total material
movement of 198 million tonnes to the end of June 2005. Field activities are
now focussed on pre commissioning and commissioning activities, with the control
system for the integration of the Escondida Norte ore into the existing mineral
distribution system ready for implementation. Overall project progress is on
schedule to meet first ore delivery to the crusher in the fourth quarter of
2005. Development costs are estimated at US$400 million (BHP Billiton share
US$230 million).
Escondida Sulphide Leach, Chile (BHP Billiton 57.5%)
The Escondida Sulphide Leach project was approved in April 2004. The project
will produce 180,000 tonnes (103,500 tonnes BHP Billiton share) of copper
cathode per annum, utilising a bacterially assisted leaching process on low-
grade run-of-mine ore from both the Escondida and Escondida Norte pits. The
resulting solutions will then be treated in conventional solvent extraction and
electrowinning plants. During the quarter, the installation of the leach pad
was completed, and ore stacking of the pad commenced. Construction activities
underway include the continuation of civil works and structural steel erection
in the solvent extraction, electrowinning and desalination plants. Development
costs are estimated at US$870 million (US$500 million BHP Billiton share) and
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 with
associated plant facilities capable of producing 200,000 tonnes per annum of
copper cathode through a combination of chemical and bacterial leaching. All
major equipment is currently being fabricated and continues to arrive on site.
Construction of mine infrastructure has commenced and the major earthworks
contracts are underway, with earthworks for the crushing, solvent extraction and
electrowinning plants complete. The construction camp and temporary office
facilities are now operational and the power line and main substation are being
tested ahead of planned first power. Development costs are estimated at US$990
million and 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. The project
comprises increases in mine, rail and port capacity through the development of
Ore Body 18, purchase of additional rolling stock and a new car dumper at
Finucane Island. Engineering activities are substantially complete, tendering
and procurement processes are well advanced and site activities are proceeding
to schedule. The project will increase installed capacity at Western Australian
Iron Ore to 118 million tonnes per annum by the second half of 2006.
Development costs are estimated at US$575 million (BHP Billiton share US$489
million).
Diamonds and Specialty Products
Panda Underground Project, EKATI Diamond Mine, Canada (BHP Billiton 80%)
The Panda Underground Project, approved in May 2004, is a 2,600 tonnes per day
sub-level retreat mine that will deliver approximately 4.6 million tonnes of ore
and 4.7 million carats of high value Panda diamonds to the EKATI process plant
over a 6 year production life. Underground pre-production development is
complete and all remaining large equipment was successfully delivered to the
mine site during the eight week 2005 winter ice road season. The production ramp
up phase is underway and tracking well, with full production expected in early
2006. Development costs are estimated at US$182 million (BHP Billiton share
US$146 million). As the project`s production ramp up has successfully
commenced, it will no longer be included in this report.
Stainless Steel Materials
Ravensthorpe Nickel Project, Australia
The Ravensthorpe Nickel Project was approved in March 2004. The project includes
the development of a mine, treatment plant and associated infrastructure near
Ravensthorpe in Western Australia. The Ravensthorpe processing plant will
produce a mixed nickel-cobalt hydroxide intermediate product (MHP). Engineering
and procurement activities are proceeding to schedule. On site, bulk earthworks
are effectively complete as are approximately 50 per cent of concrete works.
Construction contracts are underway, with four steel erection contractors
mobilised and operational at site. Given the current Australian construction
market, a review of project costs is underway. The first shipment of MHP is
expected by the second quarter of 2007.
Yabulu Extension Project, Australia
The Yabulu Extension Project was approved in March 2004. The metal refining
section of the QNI Yabulu refinery near Townsville in Queensland is being
expanded to process up to 220,000 tonnes of MHP. This additional processing
capacity will increase refinery production to 76,000 tonnes of nickel and 3,500
tonnes of cobalt. Engineering and procurement activities are proceeding to
schedule. Site construction contracts are progressing well and detailed tie-in
planning is advancing. Given the current Australian construction market, a
review of project costs is underway. First nickel metal production is expected
from the expanded Yabulu refinery by late 2007.
PETROLEUM EXPLORATION
Exploration and appraisal wells drilled during the quarter or in the process of
drilling as at 30 June 2005.
WELL LOCATION BHP BILLITON STATUS
EQUITY
Joseph Gulf of Mexico, 20% BHP Temporarily plugged
High Island Billiton; and abandoned.
Block 10L Shell operator
Blackbeard Gulf of Mexico, 5% BHP Drilling ahead.
West South Timbalier Billiton;
Block 168 Exxon operator
Mustang Gulf of Mexico, 43.66% BHP Hydrocarbons
West Cameron 77 Billiton and encountered.
OCS-G-9387 operator Preparing to run
Number 2 completion and
sidetrack.
Knotty Head Gulf of Mexico, 25% BHP Hydrocarbons
Green Canyon 512 Billiton; encountered in
Unocal secondary target.
operator Drilling ahead.
Cascade-2 Gulf of Mexico, 50% BHP Hydrocarbons
Walker Ridge 206 Billiton and encountered.
operator Running logs.
Mad Dog Deep Gulf of Mexico, 23.9% BHP Drilling ahead.
Green Canyon 826 Billiton;
BP operator
Little Burn Gulf of Mexico, 60% BHP Drilling ahead.
Green Canyon 282 Billiton and
operator
Bonsai Gulf of Mexico, 34% BHP Drilling ahead.
Atwater Valley Billiton;
398 BP operator
Shenzi-5 Gulf of Mexico, 44% BHP Hydrocarbons
Green Canyon 654 Billiton and encountered.
operator Temporarily plugged
and abandoned.
Langdale Australia / Asia 40% BHP Plugged and
Exmouth Plateau Billiton and abandoned.
operator Hydrocarbons
encountered.
MINERALS EXPLORATION
The Minerals Exploration group of BHP Billiton continued to pursue global
exploration opportunities for key commodities of interest utilising both in-
house capabilities and the Junior Alliance Programme.
Exploration drilling continued on diamond targets in Canada, Namibia and Angola;
and on porphyry copper targets in Chile and Peru. Exploration for iron ore,
coal and bauxite was undertaken in a number of regions including Australia,
Brazil and West Africa. The integration of the ex-WMC nickel portfolio will see
a significant increase in BHP Billiton exploration activities in Western
Australia, where a major exploration office will be located.
EXPLORATION EXPENDITURE
During the quarter, BHP Billiton spent US$56 million on minerals exploration, of
which US$55 million was expensed (US$149 million gross and US$147 million
expensed year to date), and US$137 million on petroleum exploration, of which
US$70 million was expensed (US$380 million gross and US$202 million expensed
year to date).
Further information on BHP Billiton can be found on our Internet site:
www.bhpbilliton.com
Australia
Jane Belcher, Investor Relations
Tel: +61 3 9609 3952 Mobile: +61 417 031 653
email: Jane.H.Belcher@bhpbilliton.com
Tania Price, Media Relations
Tel: +61 3 9609 3815 Mobile: +61 419 152 780
email: Tania.Price@bhpbilliton.com
United Kingdom
Mark Lidiard, Investor & Media Relations
Tel: +44 20 7802 4156 Mobile: +44 7769 934 942
email: Mark.Lidiard@bhpbilliton.com
Ariane Gentil, Media Relations
Tel: +44 20 7802 4177 Mobile: +44 78 81 51 8715
email: Ariane.Gentil@bhpbilliton.com
United States
Tracey Whitehead, Investor & Media Relations
Tel: USA +1 713 599 6100 or UK +44 20 7802 4031
Mobile: +44 7917 648 093
Email: Tracey.Whitehead@bhpbilliton.com
South Africa
Michael Campbell, Investor & Media Relations
Tel: +27 11 376 3360 Mobile:
Produced by the JSE SENS Department
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