Chevron in Big Offshore Investment

By Mark Beresford, Contributing Reporter

RIO DE JANEIRO – US oil giant Chevron said January 27th that it is committed to the development of a US$5.2 billion offshore project in the southern Campos basin, its largest investment to date in Brazil.

Chevron holds a 37.5 percent interest in the Petrobras-operated Papa Terra field, which has estimated reserves of 380 million barrels of oil.

There had been uncertainty over Chevron’s commitment to the Papa Terra project, because of concerns over the cost of developing the field. Papa Terra will be one of Chevron’s most capital intensive projects, and the company’s final decision to continue to invest reflects in part the strong results that it has been achieving at its other deep-water project in Brazil, the Frade field.

Papa Terra is Chevron’s second deep-water offshore development in Brazil. The field is 70 miles offshore, in water depths of approximately 3,900 feet (1,190 meters), and is located within Block BC-20.

“This decision confirms our commitment to developing new opportunities in an important basin,” George Kirkland, Chevron’s vice chairman, said in a statement.

“When completed, the Papa Terra project will represent Chevron’s largest investment in Brazil to date and is expected to grow the company’s production capacity in the country, which was established with the 2009 start-up of the Frade project ,” added Ali Moshiri, president of Chevron Africa and Latin America Exploration and Production Company.

First production from the Papa Terra project is expected in 2013. The completed facility will be capable of producing up to 140,000 barrels of crude oil per day. The project will also feature the first so-called tension leg well platform in Brazil, which will be connected to a floating production, storage, and offloading vessel.

In addition to the Papa Terra and Frade projects in the Campos Basin, Chevron also holds a 30 percent non-operated interest in the Maromba field where work continues to select an optimal development plan.

In the Santos Basin, Chevron holds a twenty percent non-operated interest in Block BS-4, where the company continues to evaluate development plans to commercialize the Atlanta and Oliva fields.

Papa Terra is a much larger and more expensive field than Frade, which began producing oil in June 2009. The Frade field has estimated reserves of 200 to 300 million barrels of oil, is costing US$3 billion to develop, and is expected to achieve peak production of 90,000 barrels of crude oil and natural gas liquids per day in 2011.

Chevron has a 51.74 percent operating interest in the Frade field, which is situated in the Campos Basin in approximately 3,700 feet (1,128 m) of water, approximately 230 miles (370 km) northeast of Rio de Janeiro.

Frade is a sub-sea development with wells tied back to a floating production, storage and offloading vessel. Crude oil production is planned to be exported to world markets, and natural gas production is expected to be provided for domestic use in Brazil.

Other partners in the Frade project are Petrobras, with a 30 percent stake, and Frade Japao Petróleo Ltda., a joint-vehicle company of INPEX, Sojitz and JOGMEC, with 18.26 percent.