Chevron working out 'final elements' toward restart of Brazil's
Frade field: CEO
Houston (Platts)--12Mar2013/351 pm EDT/1951 GMT
Chevron is "in discussions" with Venezuela about adding opportunities to
invest in that country following the recent death of its controversial
populist President Hugo Chavez, Chevron CEO John Watson said Tuesday.
But Watson told reporters following the company's annual security
analyst meeting that the issues have been "commercial terms and
considerations," although he did not immediately elaborate.
"We continue to have those discussions," he said, suggesting they
pre-dated Chavez' death last week from an unspecified cancer. "I think
there's a lot Chevron can bring to Venezuela -- jobs, investment and
ultimately higher production."
But since Venezuela is now in a period of mourning, Watson said,
"it's premature to say a lot about investment opportunities until we can
get through the [upcoming election of a new president] and engage."
Chevron has existing stakes in several oil projects in petroleum-rich
Venezuela. Among them are the Petroboscan field and the
Petroindependente projects, both in the western part of the country; the
Petropiar project that operates the Hamaca heavy oil field; and the
Petroindependencia project that is working toward commercialization of
Carabobo 3 area in the Orinoco Belt. The company also has a stake in
offshore eastern Venezuela's Plataforma Deltana area, which includes the
Loran field.
FRADE FIELD RESTART
In addition, Chevron is "working on regulatory issues" toward a restart
of the Frade Field offshore Brazil, Watson said.
Chevron last year was forced to suspend operations at Frade, located in
the Campos Basin, after a small oil spill there in 2011 of about 3,700
barrels.
"We've reached general agreement on how that will take place [and] we're
working out the final elements of that," he said. "It's now just
reaching agreement with all the regulators and legal bodies on the basis
of which field will be starting up and how it will be operated."
Chevron has had a history in Venezuela for 80 years, "through different
governments," Watson said. "It's Chevron's position to work
cooperatively with whoever is in office [and] we expect to do that" with
the new president.
The company, meanwhile, expects to add 30,000 b/d of oil equivalent to
its US Permian Basin production by year-end, George Kirkland, executive
vice president-upstream, said during the meeting; that is up from over
100,000 boe/d net currently. And by 2017, "we'll be almost at the
200,000 boe/d level."
Chevron is the basin's second-largest producer there with over 2 million
acres under lease, and has about 20 rigs there and should be at 23 rigs
by year-end, Kirkland said.
"We plan to further increase activity levels," to over 400 wells in 2013
from more than 300 last year, said Kirkland. "The Permian Basin will
remain one of our key legacy assets."
The company has focused so much on that basin, where other operators are
also seeing rapid production increases, due to "the success we're seeing
there," he said. For example, the last four Delaware basin wells the
company has drilled debuted at rates over 1,000 boe/d of resource --
considered by industry to be a good rate. Chevron has a 50%-100% stake
in those wells.
Also, Watson said Chevron entered the Kitimat LNG project in Western
Canada is "not only the size of the resource" of 50 Tcf of natural gas,
but permitting." The company and Apache Corp each hold a 50% stake in
the project, which is in its early stages, already had permits for the
LNG gas exports and an associated pipeline.
The project is already in front-end design and engineering stage, said
Watson, and "we think [it] has a good chance to move forward."
"We do have gas marketing to do," he said. "One thing our partner saw in
us was our ability to market LNG," which will be "important to underpin
that project," said Watson.
--Starr Spencer,
starr_spencer@platts.com
--Edited by Richard Rubin,
richard_rubin@platts.com
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