Chevron Corp. affiliate Tengizchevroil (TCO) will proceed with development of its Future Growth and Wellhead Pressure Management Project (FGP-WPMP) to increase crude oil production at Kazakhstan’s Tengiz oil field by 260,000 b/d.
FGP-WPMP is estimated to cost $36.8 billion. It will raise TCO’s total production to about 1 million boe/d. Chevron owns 50% of TCO, which operates Tengiz field. TCO joint venture partners are ExxonMobil Corp. 25%, KazMunayGas 20%, and LukArco 5%.
John Watson, Chevron chairman and chief executive officer, said FGP-WPMP “builds on a record of strong performance at Tengiz and will add value for Chevron.” Tengiz is a deep, supergiant oil field. The top of the reservoir is about 12,000 ft below the surface. TOC also is developing nearby Korolev field. Chevron’s 2015 net share from Tengiz and Korolev fields averaged 257,000 b/d of oil, 348 MMcfd of natural gas, and 21,000 bbl of natural gas liquids.
Jay Johnson, Chevron executive vice-president upstream, said FGP-WPMP builds on previous Tengiz expansions. It follows extensive engineering and construction planning reviews. Johnson said the final investment decision was “well-timed to take advantage of lower costs of oil industry goods and services.”
FGP-WPMP is expected to end a production plateau and keep existing plants producing at full capacity. FGP-WPMP will use sour gas injection technology developed and proven during TCO’s previous expansion in 2008 to enhance oil recovery.
Additional oil production from the just-announced expansion is expected to be on stream in 2022. Chevron is Kazakhstan’s largest private oil producer, holding stakes in the nation’s two biggest oil fields—Tengiz and Karachaganak. Chevron also is the largest private shareholder in the Caspian Pipeline Consortium, which operates a 935-mile crude oil pipeline from Tengiz to Novorossiysk on the Russian coast of the Black Sea. The pipeline provides the key export route for crude oil from TCO and Karachaganak.
Some analysts took the Chevron announced as an indicator that international oil companies are becoming more confident that oil prices have stabilized and will increase. An oil price slump started in 2014.
Matthew Sagers, head of IHS Energy’s Russia and Caspian research, said, “It shows that the market is on its way up.” He believes the oil price recovery will not be “fast or smooth,” but he sees an upward trend.
Jason Gammel, Jefferies senior oil analyst, called Chevron’s announcement “an inflection point.” Gammel said it’s the first investment of more than $10 billion announced in upstream oil and gas during 2016. “It’s a very large project and it’s a reflection of the companies having got their cash cycles under control,” Gammel said. The investment decision had been on hold since 2015.
Barclays forecast Brent crude prices will average $57/bbl in 2017.
By Paula Dittrick
Source: Oil&Gas Journal
When I left my second large company experience to become President of a small manufacturing company I did so driven by ego; I fancied the title. Soon enough I realized […]
Firm details on exactly how the U.K. will regulate new medicines is still to be decided after it leaves the EU later this year (caveats on timing abound), but we […]
The Simply Good Foods Company, the owner of Atkins-branded food products, has secured a deal to acquire protein snack maker Quest Nutrition for $1 billion. Quest, which sells a range […]