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BHP Billiton Plc - Quarterly report on exploration and development activities
BHP Billiton Plc
Share Code: BIL
Isin: GB0000566504
BHP BILLITON QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT ACTIVITIES
July 2005 - September 2005
This report covers exploration and development activities for the quarter ended
30 September 2005. Unless otherwise stated, BHP Billiton"s interest in the
projects referred to in this report is 100 per cent, and references to project
schedules are based on calendar years.
During the quarter, cost reviews were completed for the Ravensthorpe and Yabulu
projects (both Australia). Due to the impact of demand driven tightness in the
Australian labour market, rising input costs and a weakening US dollar, an
increased capital budget for both of these projects has been approved. Whilst
these industry wide conditions continue to challenge other BHP Billiton
development projects, all of our projects are tracking in line or ahead of
schedule.
Since last reporting, Escondida Norte (Chile) has been successfully commissioned
on schedule. Development costs are being finalised, however it is expected the
final cost will be below budget in local currency and marginally above budget in
US dollars due to the strengthening of the Chilean peso.
During October 2005, the Rapid Growth Project 3 expansion at Western Australia
Iron Ore and the Samarco (Brazil) expansion received Board approval. These
projects will be included in the December 2005 Exploration and Development
report.
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, integration work
continued on the Atlantis production facility at construction yards in Texas,
USA. The personnel quarters have been installed and other commissioning work is
progressing. Despite the hurricane related work interruptions in July and
September, the project currently 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 approved 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 annual capacity of 4.2 million tonnes, additional
processing facilities and associated infrastructure. Engineering and
procurement activities are continuing whilst site preparations and the
installation of temporary facilities have commenced. 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 approved 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 the 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. Design, engineering
and manufacturing of the subsea equipment continued during the quarter.
Contracts for the design, procurement and construction management of the
production platform and for fabrication of the topsides and the hull have been
awarded. Orders have been placed for all major equipment and materials.
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). Engineering and procurement activities are complete
and construction activities are now focused on completing work in preparation
for the tie-in of individual components to existing operations. Commissioning
of the DCP are 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 236 million tonnes to the end of September 2005. On 1 October,
2005, Escondida Norte ore was successfully integrated on schedule into the
existing mineral distribution system. Development costs are in the process of
being finalised. However, before foreign exchange variation, development costs
are expected to be 3 per cent below the originally approved budget of US$400M
(BHP Billiton share US$230M). Including the impact of the stronger Chilean
peso, the project is expected to be approximately 8 per cent higher than the
budgeted amount. As the project has successfully been commissioned, it will no
longer be included in this report.
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, ore stacking continued with
approximately 11 million tonnes of ore being delivered to the pad. Construction
activities transitioned from mainly civil works to structural steel erection and
piping and mechanical installation in the solvent extraction, electrowinning and
desalination plants. A project budget of US$870 million (US$500 million BHP
Billiton share) was approved by the Board 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. Major
equipment and bulk materials continue to arrive on site and mine pre-strip
operations have commenced. Permanent electrical power is now available on site
and construction of the mine and administration infrastructure and the major
earthworks are almost complete. Concrete work in all areas of the process plant
has commenced and the liner placement contract for the heaps and ponds has been
awarded and is underway. All major construction contracts have been bid and are
currently being evaluated. A project budget of US$990 million was approved by
the Board 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. Site activities continue to proceed to schedule with
construction now focused on preparation for initial commissioning activities.
The project will increase installed capacity at Western Australian Iron Ore by 8
million tonnes per annum by the second half of 2006 (this will be offset by an 8
million tonnes per annum reduction in capacity due to the suspension of the
Goldsworthy ship loading operations at Finucane Island in the third quarter of
2006 to allow for the replacement of ageing berth and production infrastructure
as part of the RGP3 expansion). Development costs are estimated at US$575
million (BHP Billiton share US$489 million).
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 continue to proceed to schedule. Earthworks in the
process plant and mine maintenance areas are now complete with concrete works in
all areas well advanced and structural steel and tank erection accelerating.
Off site fabrication and infrastructure works are proceeding to schedule.
Following a review of project costs completed in August 2005, a revised budget
of US$1,340 million has been approved. This is 28 per cent above the originally
approved budget. The first shipment of MHP remains on schedule for the second
quarter of 2007.
Yabulu Extension Project, Australia
The Yabulu Extension Project was approved in March 2004. The metal refining
section of the 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 and
the project team has now fully relocated to site. Infrastructure, access roads
and earthworks are progressing and piling activity is underway. Detailed tie-in
planning is continuing. Following a review of project costs completed in August
2005, a revised budget of US$460 million has been approved. This is 31 per cent
above the originally approved budget. First nickel metal production from 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 of
drilling as at 30 September 2005.
WELL LOCATION BHP BILLITON STATUS
EQUITY
Mustang Gulf of Mexico, 43.66% BHP Hydrocarbons
West Cameron 77 Billiton and encountered.
OCS-G-9387 #2 operator Temporarily plugged
and abandoned.
Little Burn Gulf of Mexico, 60% BHP Billiton Hydrocarbons
Green Canyon 282 and operator encountered.
Temporarily plugged
and abandoned.
Mad Dog Gulf of Mexico, 23.9% BHP At target depth.
Deep Green Canyon 826 Billiton; Running Logs.
BP operator
Blackbeard Gulf of Mexico, 5% BHP Billiton; Drilling ahead.
West South Timbalier Exxon operator
Block 168
Cascade-2 Gulf of Mexico, 50% BHP Billiton Hydrocarbons
Walker Ridge 206 and operator encountered.
Temporarily plugged
and abandoned.
Sidetrack drilling
ahead.
Knotty Head Gulf of Mexico, 25% BHP Billiton; Hydrocarbons
Green Canyon 512 Unocal operator encountered.
Drilling ahead.
Bonsai Gulf of Mexico, 34% BHP Billiton; Drilling ahead.
Atwater Valley BP operator
398
Puma-2 Gulf of Mexico, 33.3% BHP Top hole drilled,
Green Canyon 206 Billiton; temporarily
BP operator suspended. Rig
currently in
shipyard for
repairs.
Everest Gulf of Mexico, 34% BHP Billiton; Top hole drilled,
Atwater Valley BP operator temporarily
272 suspended. Rig
redeployed to finish
logging Mad Dog
Deep.
Gypsy-1 Trinidad Block 39.3% BHP Dry hole. Plugged
2(c) REA Billiton and and abandoned.
operator
Brecknock-2 Western 8.33% BHP At total depth.
Australia Billiton Completed logging.
Browse BasinWA- Woodside operator Well testing
32-R ongoing.
North Victoria, 50% BHP Billiton; Dry hole. Plugged
Wirrah-1 Australia Esso operator and abandoned.
Gippsland Basin
Vic / L2
Maliri-1 Sindh Province 37.5% BHP Dry hole. Plugged
Pakistan Billiton; and abandoned.
Jhangara E.L. Premier operator
Davan-1 UK North Sea 35% BHP Billiton; Drilling ahead.
Block 9 / 5a-4 Total operator
Following several hurricanes, exploration and development drilling in the Gulf
of Mexico was temporarily suspended during the quarter. Exploration and
drilling activity has since resumed, however as a result of the disruptions, all
well schedules in the Gulf of Mexico have been delayed by 4 to 6 weeks.
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 continued on diamond targets in Canada, Angola and Botswana; and on
porphyry copper targets in Chile, Peru and the Democratic Republic of Congo.
Exploration for iron ore, coal and bauxite was undertaken in a number of regions
including Australia, Brazil and West Africa. The integration of WMC"s
exploration activities was completed with a corresponding increase in nickel
exploration activities in Western Australia.
EXPLORATION EXPENDITURE
During the quarter, BHP Billiton spent US$39 million on minerals exploration, of
which US$39 million was expensed, and US$127 million on petroleum exploration,
of which US$56 million was expensed.
Further information on BHP Billiton can be found on our Internet site:
http://www.bhpbilliton.com
27 October 2005
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: US +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: +27 82 458 2587
email: Michael.J.Campbell@bhpbilliton.com
Date: 27/10/2005 09:09:10 AM Produced by the JSE SENS Department
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