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BIL
BIBLT
BHP Billiton Plc - Quarterly report on exploration and development activities
BHP Billiton Plc
Share code: BIL
ISIN: GB0000566504
24 October 2006
Number 28/06
BHP BILLITON QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT ACTIVITIES
July 2006 - September 2006
This report covers exploration and development activities for the quarter
ended 30 September 2006. 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.
Whilst the majority of BHP Billiton"s projects remain broadly on schedule and
budget, tight labour markets and shortages of equipment and supplies continue
across the industry. These issues are particularly acute in Western Australia
and the Gulf of Mexico and continue to impact costs and schedules.
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. During the
quarter, the facility sailed to its offshore field location and was
permanently installed with all of its 12 mooring lines connected. Six
development wells were drilled and two were completed as at the end of
September. This development will have a gross nameplate daily capacity of
200,000 barrels of oil and 180 million cubic feet of natural gas. A detailed
review of cost estimates continues as the project"s schedule becomes more
certain. Capital cost pressures are likely to result in a capital cost
increase of more than 30 per cent in excess of the currently approved budget.
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. Civil engineering work is almost
complete ahead of the scheduled mobilisation of the mechanical installation
contractor on site. BHP Billiton"s share of development costs, based on the
operator"s recently revised estimate, has increased by 20 per cent to US$300
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 seven
well subsea system. 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,
batch setting operations for five new development wells were completed and
fabrication of the hull and topsides continued at construction yards in Texas
and Louisiana respectively. 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 with
a gross daily capacity of approximately 80,000 barrels of liquids, which will
be provided under a 10 year service agreement. During the quarter, the first
subsea system was received and drilling of the first well commenced. Topsides
fabrication in Singapore is progressing on schedule. Project costs are
estimated at US$600 million (BHP Billiton share US$300 million). 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. During the quarter, fabrication of the jacket and
topsides commenced. 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.
Shenzi Development, Gulf of Mexico, USA (BHP Billiton 44%, operated)
In June 2006, BHP Billiton approved the development of the Shenzi oil and gas
field located in the Gulf of Mexico. The project includes the construction,
installation and operation of a stand-alone platform and the associated subsea
system. Initial field development will consist of seven producing wells and
the full field development is expected to have up to 15 wells. The facility
will have a gross nameplate daily capacity of 100,000 barrels of oil and 50
million cubic feet of gas. During the quarter drilling of the development
wells commenced as did fabrication of the topsides and hull. Gross costs for
the full field development through 2015 are estimated at US$4.4 billion (BHP
Billiton share US$1.94 billion) with first production expected by mid 2009.
MINERALS DEVELOPMENT
Aluminium
Alumar Refinery expansion, Brazil (BHP Billiton 36%, non-operated)
The Alumar Refinery expansion was approved in December 2005 with a budget of
US$518 million (BHP Billiton share) and an expected commissioning date of mid
2008. The project includes upgrades to the existing production unit and
duplication of the upgraded line. Alumina capacity will increase by 2 million
tonnes per annum to 3.5 million tonnes per annum. Detailed engineering is now
50 per cent complete.
Base Metals
Spence, Chile (BHP Billiton 100%)
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, the mine pre-strip was completed on schedule. Low grade
oxide mineralisation continued to be placed on the dump leach pad and oxide
ore is now available to feed the crusher. Electrical and plant piping
installation is nearing completion and pre-commissioning testing is continuing
with the project on schedule to commence production in the current quarter.
The project remains within the budget of US$990 million excluding the foreign
exchange impacts of a stronger Chilean peso.
Carbon Steel Materials
Rapid Growth Project 3, Australia (BHP Billiton 85%, operated)
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.
Engineering is essentially complete, and all major orders and contracts have
now been let. Construction at Area C is currently focused on concrete works
and the first new rail sidings are now operational. The demolition of the old
Goldsworthy facilities in Port Hedland, together with the upgrade of the
associated berth commenced on 1 September as planned. 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%, non-operated)
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 Ponta Ubu, a
third pellet plant, additional stockyard and enhanced ship loading capacity at
the Ponta Ubu site. Detailed engineering is 70 per cent complete and all
major equipment procurement and construction contracts have been awarded.
Construction activities are continuing at Germano, Ubu and on the pipeline.
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.
Diamonds and Specialty Products
Koala Underground Project, Canada (BHP Billiton 80%, operated)
In June 2006, BHP Billiton approved the development of the third underground
mine at the EKATI diamond mine in Canada. In addition to the mine development,
the investment provides for mine ventilation systems, an underground conveyor
connecting to the existing Panda underground conveyor and minor surface
infrastructure and mobile equipment. The project will deliver a total of 10.6
million dry tonnes of ore to the process plant and recover 9.8 million carats
of high quality Koala diamonds over an 11 year period. During the quarter,
underground tunnelling continued and construction of the surface dewatering
and mine ventilation facilities were initiated. Procurement is well advanced
and engineering is proceeding to schedule. Total development costs are
estimated at US$250 million (BHP Billiton share US$200 million). First
production is expected in the last quarter of 2007.
Stainless Steel Materials
Ravensthorpe Nickel Project, Australia (BHP Billiton 100%)
In August 2005, a revised budget of US$1,340 million was approved for the
Ravensthorpe Nickel Project. 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). A detailed review of the cost
estimate and delivery schedule is continuing, however as previously reported,
cost pressures are likely to result in a capital cost increase of more than 30
per cent in excess of the currently approved budget. Engineering and
procurement activities are now finalised and construction progress is
approximately 60 per cent complete. The construction focus is now on
mechanical, piping and electrical installation with 2,000 people currently
working on site. The second autoclave has been installed. Pre-commissioning
and commissioning activities are progressing and mining operations have
commenced with the first blast occurring in September 2006.
Yabulu Extension Project, Australia (BHP Billiton 100%)
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. Overall project progress is approximately 81 per cent complete.
Following a review of project costs completed in August 2005, a revised budget
of US$460 million was approved. The project is on schedule and commissioning
will start ahead of delivery of feed from Ravensthorpe.
PETROLEUM EXPLORATION
Exploration and appraisal wells drilled during the quarter or in the process
of drilling as at 30 September 2006.
WELL LOCATION BHP BILLITON STATUS
EQUITY
Blackbeard Gulf of Mexico, 5% BHP Billiton; Temporarily
West-1 South Timbalier Exxon operator abandoned.Hydrocarbons
Block 168 encountered
Puma-2 Gulf of Mexico, 33.3% Operations
Green Canyon BHP Billiton; Temporarily suspended,
Block 821 / 866 BP operator rig released
Ouachita-1 Gulf of Mexico, 16.875% BHP Plugged and abandoned.
Green Canyon Billiton; Amerada Dry hole.
Block 376 Hess operator
Kingbird-1 Trinidad & Tobago, 30% BHP Billiton Hydrocarbons
Block 3(a) and operator encountered.Well not
tested.
Ruby-1 Trinidad & Tobago, 25.5% Drilling ahead.
Block 3(a) BHP Billiton
and operator
Brecknock-3 Browse Basin 8.33% Plugged and
Western Australia BHP Billiton; abandoned.Successful
WA-32-R Woodside operator appraisal.
Pemberton-1 Dampier Sub-Basin 16.66% Plugged and abandoned.
Western Australia BHP Billiton; Hydrocarbons
WA-28-P Woodside operator encountered.
Huntsman East- Beagle Sub-Basin 10.23% Plugged and abandoned.
1 Western Australia BHP Billiton; Dry hole.
WA-297-P Woodside 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.
Grassroots exploration continued on diamond targets in Angola and Canada; on
copper targets in Mexico, Mongolia and the Democratic Republic of Congo; and
on nickel targets in Australia and Russia. Exploration for iron ore, coal and
bauxite was undertaken in a number of regions including Australia, Brazil and
West Africa.
During the quarter, BHP Billiton spent US$51 million on minerals exploration,
all of which was expensed. Petroleum exploration expenditure was US$79
million, of which US$65 million was expensed.
Further information on BHP Billiton can be found on our Internet site:
www.bhpbilliton.com
Australia
Samantha Evans, Media Relations
Tel: +61 3 9609 2898 Mobile: +61 400 693 915
email: Samantha.Evans@bhpbilliton.com
Jane Belcher, Investor Relations
Tel: +61 3 9609 3952 Mobile: +61 417 031 653
email: Jane.H.Belcher@bhpbilliton.com
United Kingdom
Mark Lidiard, Investor & Media Relations
Tel: +44 20 7802 4156 Mobile: +44 7769 934 942
email: Mark.Lidiard@bhpbilliton.com
Illtud Harri, Media Relations
Tel: +44 20 7802 4195 Mobile: +44 7920 237 246
email: Illtud.Harri@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: 24/10/2006 08:34:29 AM Produced by the JSE SENS Department
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