Chevron 2007 Annual Report Supplement

Upstream Africa
Bonga SW/Aparo Project The Aparo Field in OML 132 and OML 140
and the Bonga SW Field in OML 118 share a common geologic structure
and are planned to be jointly developed. The geologic structure
lies 70 miles (113 km) offshore in 4,300 feet (1,311 m) of water
off the coast of the western Niger Delta. A pre-unit agreement
was executed between Chevron and the OML 118 partner group
in 2006. Final terms for a unitization agreement are expected to
be completed in mid-2008. In 2007, FEED and tendering of major
contracts continued. Development will likely involve an FPSO vessel.
Partners were expected to make the final investment decision
in second-half 2008, with production start-up projected for 2012.
Maximum total daily production of 150,000 barrels of crude oil is
expected to be reached within one year of production start-up. The
company recognized initial proved undeveloped reserves in 2006
for its approximate 20 percent nonoperated working interest in the
unitized area. The estimated production life of the field is 20 years.
Nnwa Field Discovered in 1999, the Nnwa Field in OML 129 extends
into two adjacent blocks not owned by Chevron. Commerciality is
dependent upon resolution of the Nigerian Deepwater Gas fiscal
regime and collaboration agreements with the adjacent blocks.
A joint study was initiated in 2007 with owners in adjoining block
OML 135 to evaluate development alternatives. The study was
continuing into 2008.
Nsiko Project Chevron has a 95 percent operated interest in the
Nsiko discovery on OML 140. This discovery lies in approximately
5,800 feet (1,768 m) of water, 90 miles (145 km) off the coast of the
western Niger Delta region. As of early 2008, subsurface evaluations
and field development planning were ongoing. An investment
decision is contingent upon negotiations concerning the level of
Nigerian content in the project’s contracts.
Usan Project Chevron holds a 30 percent nonoperated working
interest in this development project in OML 138, which lies in 2,461
feet (750 m) of water, 62 miles (100 km) off the coast of the eastern
Niger Delta region. FEED on the selected FPSO concept was
completed in 2007 and the construction contract was expected to
be awarded in 2008. The company recognized proved undeveloped
reserves in 2004. Production start-up is estimated for late 2011,
before which time a portion of the proved undeveloped reserves
are expected to be reclassified to the proved developed category.
Maximum total daily production of 180,000 barrels of crude oil is
expected to be achieved within one year of start-up. The end date
of the concession period will be determined after final regulatory
approvals are obtained.
Exploration Commercial activities include the ongoing conversions
of blocks from their original OPL status to OML status, usually
accompanied by a relinquishment of 50 percent of the block area.
Blocks that underwent this conversion during 2007 and in early
2008 include OML 140 (formerly OPL 249) and OML 138 and 139
(formerly OPL 222).
Chevron participated in two deepwater exploration wells
during 2007. One well, Idang SW in OPL 221, was deemed to be
noncommercial. The Uge-2 well, drilled as an appraisal well to the
Uge-1 discovery in OPL 214, confirmed hydrocarbons. Two exploration
wells were planned for 2008, one well in OPL 214 and the other
well in OPL 247.
Chevron Corporation 2007 Supplement to the Annual Report
Natural Gas Commercialization Projects
Escravos Gas Plant (EGP) Phase A Construction continued
during 2007 on the Chevron-operated and 40 percent-owned EGP
Phase 3A expansion in Escravos that is expected to start up in
2009. Phase 3A scope includes offshore natural-gas gathering and
compression infrastructure and a second gas processing facility.
The project is designed to increase daily processing capacity from
285 million to 680 million cubic feet of natural gas and increase
LPG and condensate daily export capacity from 12,000 to 47,000
barrels. The facilities will process natural gas from the Meji, Delta
South, Okan and Mefa fields. Proved undeveloped reserves associated
with EGP Phase 3A were recognized in 2002. These reserves
are expected to be reclassified to proved developed as various
project milestones are reached and related projects are completed.
The anticipated life of the project is 25 years. Total capital costs for
the project are approximately $2.8 billion, which includes a second
phase of development.
EGTL Chevron and NNPC are developing a 34,000-barrel-per-day
gas-to-liquids facility at Escravos that is designed to process 320
million cubic feet per day of natural gas from the EGP Phase 3A.
Site preparation and module construction occurred during 2007,
and as of early 2008, 90 percent of engineering and procurement
activities have been completed. Chevron has a 75 percent interest
in the plant, which began construction in 2005 and is expected to
be operational by the end of the decade. Total cost of the project is
estimated at $2.9 billion.
Olokola LNG Project In March 2007, Chevron signed a shareholders’
agreement with NNPC and partners for a 19.5 percent interest in the
OKLNG Free Zone Enterprise (OKLNG), which will operate the
Olokola LNG project. OKLNG plans to build a multitrain, 22 millionmetric-ton-per-year
natural gas liquefaction facility and marine
terminal located in a free trade zone northwest of Escravos. The
project entered FEED in 2006 and is expected to be implemented in
phases, commencing with two trains having at least 11 million metric
tons per year of total capacity. In 2007, Chevron completed the
certification of the potentially recoverable natural-gas volumes
required to satisfy the project’s supply requirements. Approximately
50 percent of the gas supplied to the plant is expected to be provided
from the producing areas associated with Chevron’s joint-venture
arrangement with NNPC. As of early 2008, additional technical and
commercial work was under way to optimize the final design.
West African Gas Pipeline Chevron holds a 36.7 percent interest in
the West African Gas Pipeline that is designed to supply Nigerian
natural gas to customers in Ghana, Benin and Togo for industrial
applications and power generation. First gas was expected to be
shipped by mid-2008, and facilities with a capacity of 170 million
cubic feet of natural gas per day were targeted for completion in
second-half 2008. Chevron is the managing sponsor in West African
Gas Pipeline Company Limited, which constructed, owns and
operates the 412-mile (678-km) pipeline.
Nigeria – São Tomé e Príncipe Joint
Development Zone (JDZ)
Chevron holds a 45.9 percent operated interest in JDZ Block 1. In
2006, the first exploration well, Obo-1 in JDZ Block 1, encountered
hydrocarbons. In 2008, technical studies were planned to determine
the need for additional drilling and evaluate development
alternatives.