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BIL
BIBLT
BHP Billiton Plc - BHP Billiton Quarterly Report On Exploration
And Development Activities October 2005 - December 2005
BHP Billiton Plc
Share code: BIL
ISIN: GB0000566504
24 January 2006
BHP BILLITON QUARTERLY REPORT ON EXPLORATION
AND DEVELOPMENT ACTIVITIES
October 2005 - December 2005
This report covers exploration and development activities for the quarter ended
31 December 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.
Industry wide, the supply side response to continued strong global demand for
raw materials remains constrained by a shortage of people, equipment and
supplies. This has led to tight labour markets and difficulty in sourcing
construction and drilling plant and machinery, which in turn has led to rising
input costs. Currency strength against the US dollar is also adding further
pressure. These conditions, which are currently particularly acute in Australia
and the Gulf of Mexico, continue to challenge the ability of BHP Billiton to
deliver development projects to budget. Despite these pressures, all projects
currently remain on or ahead of schedule, with the Atlantis South schedule under
review following the recent hurricanes in the Gulf of Mexico.
During the quarter, the Board approved the Rapid Growth Project 3 expansion at
Western Australia Iron Ore (Australia), the Third Pellet Plant expansion at
Samarco (Brazil), the Stybarrow and NWS Angel Petroleum developments (both
Australia) and the Alumar Refinery expansion (Brazil).
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. Preparation for drilling of the development wells commenced, as did
installation of the flowlines that will connect the Atlantis production
facilities to the Caesar and Cleopatra pipeline system. The recent hurricanes
in the Gulf of Mexico have impacted the availability of equipment required to
allow for completion on schedule in the third quarter of 2006. As a result, the
project schedule 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. 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 and construction of pre-assembly units has commenced. A number of
major construction contracts were also awarded during the quarter. 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 located
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. During the quarter, design,
engineering and manufacture of the subsea equipment continued, whilst
contractual activity focused on the finalisation of key offshore installation
contracts. Development costs are estimated at US$850 million (BHP Billiton
share US$300 million) with first production expected by the end of 2007.
Stybarrow Development, Australia (BHP Billiton 50%, operated)
In November 2005, BHP Billiton approved the Stybarrow oil field development
located off the north-west coast of Australia. The project involves a subsea
development and a Floating Production Storage and Offtake (FPSO) facility
capable of producing approximately 80,000 barrels of liquids a day (100% basis),
which will be provided under a 10 year minimum service agreement. Detailed
design is underway and major equipment and fabrication contracts have been
placed. Project costs are estimated at approximately US$600 million (BHP
Billiton share approximately US$300 million) and first production is expected
during the first quarter 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 Shelf
Venture"s Angel gas and condensate field off the north-west coast of Australia.
The project involves the installation of the Venture"s third major offshore
production platform and associated infrastructure, including a new subsea 50
kilometre pipeline which will be tied into the North Rankin platform.
Hydrocarbons will be produced through one processing unit with a gross daily
capacity of up to 800 million standard cubic feet of gas and associated
condensate. Detailed design commenced during the quarter and the topsides
installation contract has been awarded. BHP Billiton"s share of development
costs, based on the operator"s estimate, is approximately US$200 million. The
development 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 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 to 3.5 million tonnes per annum (100%
basis). Construction activity is nearing completion. Commissioning will begin
in the first quarter of 2006.
Alumar Refinery expansion, Brazil (BHP Billiton 36%)
The Alumar Refinery expansion was approved in December 2005 with a budget of
US$518 million (BHP Billiton share). The project includes upgrades to the
existing production unit and duplication of the upgraded line and will increase
alumina capacity by 2 million tonnes per annum to 3.5 million tonnes per annum
(100% basis). Detailed engineering, procurement and construction of temporary
site facilities commenced during the quarter. Commissioning is expected to be
completed in mid calendar year 2008.
Base Metals
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 20 million tonnes of ore being delivered to the pad to date.
Permanent power is now available on site and construction of the inoculation
plant has commenced. Structural steel erection, piping and mechanical
installation in the solvent extraction, electrowinning and desalination plants
also continued during the quarter. A project budget of US$870 million (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 with
associated plant facilities capable of producing 200,000 tonnes per annum of
copper cathode through a combination of chemical and bacterial leaching. During
the quarter, major equipment and bulk materials continued to arrive on site and
mine pre-strip operations proceeded to schedule. Construction of the mine and
administration infrastructure is complete. Concrete work in all areas of the
process plant is almost complete and liner placement for the heaps and ponds is
continuing. Mechanical and structural works have also commenced and all major
construction contracts have been awarded. The project budget is US$990 million.
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 with a budget of
US$575 million (BHP Billiton share US$489 million). 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 are proceeding to schedule and construction activities
continue to focus 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, related to the 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
will comprise expansions to mine, rail and port facilities. Installed capacity
at Western Australian Iron Ore"s Area C mine will increase by 20 million tonnes
per annum by the fourth quarter of 2007, and the project will also deliver some
latent capacity at the port to be utilised in future expansions. Initial
engineering activities and early procurement works are proceeding to plan.
Development costs are estimated at US$1.5 billion (US$1.3 billion BHP Billiton
share).
Samarco Third Pellet Plant Project, Brazil (BHP Billiton 50%)
The Samarco Third Pellet Plant Project was approved in October 2005. The
project will increase annual iron ore pellet production capacity by 7.6 million
tonnes to 21.6 million tonnes per annum (100% basis). The new facilities will
include additional mining capacity and a new concentrator at the Germano site, a
400 kilometre slurry pipeline from Germano to Ponte Ubu and a third pellet
plant, additional stockyard and enhanced shiploading capacity at the Ponta Ubu
site. Detailed engineering, procurement and initial construction activities
have commenced. The project budget is US$1.18 billion (US$590 million BHP
Billiton share). Production is scheduled to commence during the first half of
2008.
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, procurement, off site fabrication and
infrastructure activities are all proceeding to schedule. On site, thickener and
tank construction is well advanced and the acid plant construction is proceeding
to schedule. Following a review of project costs completed in August 2005, a
revised budget of US$1,340 million was approved. 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 continue to proceed to schedule,
work is underway on the two major vertical packages and structural steel
fabrication has commenced. Following a review of project costs completed in
August 2005, a revised budget of US$460 million was approved. 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 31 December 2005.
WELL LOCATION BHP BILLITON STATUS
EQUITY
Mad Dog Deep Gulf of 23.9% BHP Hydrocarbons
Mexico, Billiton; encountered.
Green Canyon BP operator Plugged and
826 abandoned.
Blackbeard Gulf of 5% BHP Billiton; Drilling ahead.
West Mexico, Exxon operator
South
Timbalier
Block 168
Cascade-2 Gulf of 50% BHP Billiton Hydrocarbons
Mexico, and operator encountered.
Walker Ridge Plugged and
206 abandoned.
Knotty Head Gulf of 25% BHP Hydrocarbons
1 Mexico, Billiton; encountered.
Green Canyon Unocal operator See News Release of
512 20 December 2005.
Sidetrack drilling
ahead.
Bonsai Gulf of 34% BHP Hydrocarbons
Mexico, Billiton; encountered.
Atwater Valley BP operator Plugged and
398 abandoned.
Puma-2 Gulf of 33.3% BHP Temporarily
Mexico, Billiton; suspended.Rig
Green Canyon BP operator currently in
206 shipyard for
repairs.
Everest Gulf of 34% BHP Drilling ahead.
Mexico, Billiton;
Atwater Valley BP operator
272
Brecknock-2 Western 8.33% BHP Hydrocarbons
Australia, Billiton; encountered.
Browse BasinWA- Woodside Plugged and
32-R operator abandoned
Calliance-1 Western 20% BHP Hydrocarbons
Australia, Billiton; encountered.
Browse BasinWA- Woodside Plugged and
32-R operator abandoned
Davan-1 UK North Sea, 35% BHP Drilling ahead.
Block 9 / 5a-4 Billiton;
Total operator
MINERALS EXPLORATION
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; on
porphyry copper targets in Chile, Peru and the Democratic Republic of Congo; and
on nickel targets in Australia. Exploration for iron ore, coal and bauxite was
undertaken in a number of regions including Australia, Brazil and West Africa.
EXPLORATION EXPENDITURE
During the six months ended 31 December 2005, BHP Billiton spent US$99 million
on minerals exploration, of which US$96 million was expensed, and US$251 million
on petroleum exploration, of which US$123 million was expensed.
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
Samantha Evans, Media Relations
Tel: +61 3 9609 2898 Mobile: 61 400 693 915
email: Samantha.Evans@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
Alison Gilbert, Investor Relations
Tel: +27 11 376 2121 UK +44 20 7802 4183
email: Alison.Gilbert@bhpbilliton.com
Date: 24/01/2006 07:19:43 AM Produced by the JSE SENS Department
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