Expl & Dev Report Q/E Sep 02
BHP Billiton Limited
24 October 2002
BHP Billiton Limited is issuing this announcement to fulfil disclosure
obligations arising from its secondary listing on the London Stock Exchange.
The text of this release is identical to that issued by BHP Billiton Plc
earlier.
Date 24 October 2002
Number 55/02
BHP BILLITON QUARTERLY REPORT ON EXPLORATION
AND DEVELOPMENT ACTIVITIES
July 2002 - September 2002
This report covers exploration and development activities for the quarter ended
30 September 2002. Unless otherwise stated, BHP Billiton's interest in the
projects referred to in this report is 100 per cent, and references to quarters
are based on calendar years.
PETROLEUM DEVELOPMENT
Bream Pipeline, Australia (BHP Billiton 50%, non operated)
Offshore pipeline and platform riser installations were successfully completed
during the quarter, and tie-in of the new pipeline to existing trunk lines is
near completion. Platform modification and construction work is also
progressing. First gas and gas-liquids production is now expected ahead of
schedule during the first quarter of 2003.
North West Shelf expansion, Australia (BHP Billiton 16.67%, non operated)
Construction of the fourth liquefaction processing train is 52% complete and
remains on schedule to start up in mid 2004. The second trunkline is 26%
complete with the final major contract covering the subsea installation to be
awarded in October. The manufacture of the pipeline has been completed.
Minerva, Australia (BHP Billiton 90%, operated)
Following the approval announced in May for the development of the Minerva gas
field in the offshore Otway Basin, Victoria, design work has commenced under a
Lump Sum Turn Key contract awarded to a joint venture comprising McConnell
Dowell Constructors (Australia) and Saipem (Portugal) for engineering and
construction of the flowlines and gas plant. The design and manufacture of the
subsea trees has been completed under a separate lump sum contract with Cooper
Cameron Singapore Pte Ltd. Drilling and completion of the two new Minerva subsea
production wells is expected to start in November/December 2002. The project
remains on budget (BHP Billiton's share of capital expenditure is US$123
million) and on schedule for first gas in the first quarter 2004.
Zamzama Field Development, Pakistan (BHP Billiton 38.5%, operated)
In March approval was announced for the development of the Zamzama Gas Field.
The development is being executed on a fast track basis and will include
drilling at least three producing wells and constructing two additional 140 MMcf
/d processing trains. The drilling of the first well commenced mid July 2002 and
was completed in the first week of October. The second well spudded on 12
October 2002 and is proceeding to plan. The basic engineering design and the
tendering process for the equipment packages and materials with long lead
delivery times are complete. Facilities construction is ongoing and the project
is on track to meet its objectives.
OHANET Development, Algeria (BHP Billiton 45%, joint operating organisation
comprising SONATRACH/BHP Billiton)
The OHANET Development consists of the development of four gas-condensate
reservoirs in the Illizi Basin in southern Algeria. The project will provide a
gas treatment facility of 20 million standard cubic metres per day fed by 47
production wells, of which 32 will be new and 15 will be re-completions of
existing oil producers. 3D seismic data across all reservoirs has been processed
and incorporated into the reservoir models. By the end of September 2002 a total
of 22 new wells had been drilled and completed and 11 existing wells had been
re-completed. Facilities engineering is complete and all equipment and most bulk
materials are now on site. Overall construction progress is 73%. First
production is scheduled for the second half of 2003.
ROD Integrated Development, Algeria (BHP Billiton 35.1%, joint operating entity
comprising SONATRACH/BHP Billiton)
The ROD Integrated Development consists of the development of six satellite
oilfields in the Berkine Basin in eastern Algeria. The project will produce
80,000 barrels of Sahara Blend crude oil per day, with associated gas being
reinjected into the reservoir together with water to provide pressure support to
the reservoir. Thirty-six development wells will be required, 10 of which will
be recompletions of already drilled wells. At the end of September 2002 the rig
was working on the eighth development well. Critical long lead engineering items
are progressing to schedule. The EPC (Engineer/Procure/Construct) contractor,
Saipem/Bouygues, is progressing engineering and procurement. Site preparation
commenced in early October 2002. First production is scheduled for end first
quarter 2004.
Caesar/Cleopatra Transportation Systems, Gulf of Mexico, USA (BHP Billiton
interest in Caesar pipeline, 25%; interest in Cleopatra pipeline, 22%.
Non-operated)
In February BHP Billiton acquired a 25% interest in the Caesar oil pipeline and
a 22% interest in the Cleopatra gas pipeline which will transport product from
the Mad Dog and Atlantis fields to pipelines closer to shore. BHP Billiton's
share of the capital costs for these new-build projects is estimated at US$100
million. Detailed engineering continues for both systems. Commissioning is
expected in 2004.
Mad Dog Development, Gulf of Mexico, USA (BHP Billiton 23.9%, non-operated)
BHP Billiton announced its sanction of the Mad Dog field in February 2002,
approving up to US$335 million for development of the Gulf of Mexico oil and gas
field. Fabrication work began on the hull in July and on the topsides in August.
First production is expected at the end of calendar year 2004.
Atlantis Development, Gulf of Mexico, USA (BHP Billiton 44%, non-operated)
In May BHP Billiton approved up to US$355 million to progress the development of
the Atlantis field in the Gulf of Mexico. Detailed engineering work is
continuing, and full project approval is expected later this year.
MINERALS DEVELOPMENT
Aluminium
Mozal 2 Expansion, Mozambique (BHP Billiton 47.11%)
Construction Work on the 253,000 tonne per annum Mozal II aluminium smelter
project continued during the quarter. Production targets are now ahead of
schedule by approximately six months and cost trends to date indicate that the
project will likely be completed under the project budget of US$860 million (BHP
Billiton share US$405 million). Initial production is now expected by the end of
the second quarter 2003 and full production expected by the end of 2003.
At the end of September 2002, overall construction work had reached 60 per cent.
The civil work was almost complete as was the structural steel erection and
building cladding. Installation of the main process equipment has commenced and
is steadily progressing as equipment from various countries flows into the
construction site.
Hillside Expansion, South Africa
Main construction work on the 130,000 tonne per annum Hillside III aluminium
smelter project commenced on 1 April 2002, and at the end of September overall
construction work has reached 19 per cent. The main civil works are progressing
well and the first structural steel has been erected. First metal production
from the new potline facilities is expected slightly ahead of initial schedule
in the first quarter of 2004, with full production expected by the end of the
second quarter 2004. Expenditure to date remains in line with budget.
Base Metals
Escondida Phase IV Expansion, Chile (BHP Billiton 57.5%)
BHP Billiton and its joint venture partners in the Escondida copper mine in
northern Chile continued development activities for the Escondida Phase IV
development project during the quarter. The Phase IV expansion will increase ore
processing capacity by 85 per cent resulting in an average additional copper
production of 400,000 tonnes per annum (average total production of 1.2 million
tonnes per annum) over the first five years.
The project continues to advance in accordance with the planned schedule. As of
the end of September the project had reached mechanical completion and the
facilities had moved into the commissioning phase, with ramp up to full
production expected by April 2003.
The development has an estimated capital cost of US$1,045 million (BHP Billiton
share US$600 million), and final costs are expected to be on or under budget.
Carbon Steel Materials
Dendrobium Coal Project, Australia
The Dendrobium Mine will be a low cost underground longwall operation capable of
producing 5.2 mtpa of raw coal resulting in 2.6 mtpa of coking coal and 1mtpa of
thermal coal. The main customer for the coking coal is the BHP Steel Port Kembla
steelworks located only 7km from the mine site.
Construction activities are underway at all of the three main sites covering the
coal loading facilities (Kemira Valley), mine surface facilities (Dendrobium)
and ventilation shaft. Underground tunnelling at both the Dendrobium and Kemira
Valley locations is well progressed with boring of the ventilation shaft about
one third complete. Approximately US$55 million has been committed to date. The
capital forecast and longwall startup schedule remain unchanged at US$170
million and May 2005 respectively.
Mining Area C Project, 'C Deposit', Australia (BHP Billiton 85%)
The project provides for the development of a mine, processing plant, 38
kilometre rail spur and associated infrastructure for an operation to build up
to 15 mtpa at Mining Area C, which is situated approximately 120 kilometres from
Newman in Western Australia's Pilbara region. The capital cost is estimated to
be US$213 million (BHP Billiton share US$181 million).
Currently detailed engineering is nearing completion and construction work has
commenced at both the plant and infrastructure rail and road sites. Extraction
and shipment of bulk sample material continued during the quarter, and overall
the project remains on schedule and within budget.
A joint venture has been signed with POSCO of South Korea for the development of
the 'C Deposit' section of Mining Area C whereby POSCO will take a 20 per cent
interest in the deposit.
Port & Capacity Expansion Project (PACE), Australia (BHP Billiton 85%)
The project provides for the upgrade of the BHP Billiton rail and port
facilities in a staged process to meet forecast increase in sales of iron ore
over the next decade. The approvals cover the first stage of PACE, which will
increase capacity to 81mtpa by 2004. Further stages will provide for capacity
levels to exceed 90 mtpa. The estimated capital cost for Stage 1 is US$351
million (BHP Billiton share US$299 million).
Detailed engineering is progressing and contract and procurement packages are
being tendered and awarded. Construction work has commenced on site and the
project remains on schedule and within budget.
Energy Coal
Mount Arthur North, Australia
The Mount Arthur North Mine will be capable of producing up to 15 million tonnes
of raw thermal coal per annum when full production is achieved in 2006. The
project is proceeding to schedule. Mining activities have been handed over to
operations and construction is focussed on the delivery of the coal handling
plant for pre-commissioning during October. The coal preparation plant and
export facilities are progressing well. Forecast cost to completion is within
the approved budget of US$411 million.
San Juan Underground, USA
Following plan approvals and inspection by the Mine Safety and Health
Association, longwall operations commenced in October 2002. Project spending is
forecast to be on budget at US$146 million.
PETROLEUM EXPLORATION
Exploration and appraisal wells drilled during the quarter or in the process of
drilling as at 30 September 2002.
WELL LOCATION BHP Billiton EQUITY STATUS
Boris-2 Gulf of Mexico, 50% BHP Billiton Operator Well reached bottom hole
location, rig released. For more
(previously reported as Green Canyon 282 information on Boris see
Boris North-1) News@BHPBilliton, 9 July 2002
Kansas-1 Gulf of Mexico, 22% BHP Billiton; Marathon Drilling ahead.
Operator
Atwater Valley 489
Neptune-3 Gulf of Mexico, 50% BHP Billiton Operator Hydrocarbons encountered.
Atwater Valley 617 Plugged and abandoned.
See News Release of 18 July.
Shenzi-1 Gulf of Mexico, 44% BHP Billiton Drilling ahead.
Green Canyon 654 Operator
Vortex-1 Gulf of Mexico, 33.3% BHP Billiton; Drilling ahead.
Atwater Valley 261 Kerr McGee well operator
MINERALS EXPLORATION
The exploration group of BHP Billiton Minerals continued to pursue global
exploration opportunities for key commodities of interest to the group utilising
both the Junior Alliance Program and in house generative capabilities. This has
lead to continued growth and diversification in the exploration portfolio and
increased quality exploration opportunities.
A third FALCON(TM) platform arrived in Australia and has commenced flying selected
projects and areas. The other two units remain employed in South America and
Africa.
Expenditure
Information related exploration expenditure will be included in the BHP Billiton
first quarter results, to be released on 31 October 2002.
Further news and information can be found on our Internet site:
www.bhpbilliton.com
Australia United Kingdom
Andrew Nairn, Investor Relations Mark Lidiard, Investor & Media Relations
Tel: + 61 3 9609 3952 Mobile: +61 408 313 259 Tel: +44 20 7747 3956
email: Andrew.W.Nairn@bhpbilliton.com email: Mark.Lidiard@bhpbilliton.com
Mandy Frostick, Media Relations South Africa
Tel: +61 3 9609 4157 Mobile: +61 419 546 245 Michael Campbell, Investor & Media Relations
email: Mandy.J.Frostick@bhpbilliton.com Tel: +27 11 376 3360 Mobile: +27 82 458 2587
email: Michael.J.Campbell@bhpbilliton.com
United States
Francis McAllister, Investor Relations
Tel: +1 713 961 8625 Mobile: +1 713 480 3699
email: Francis.R.McAllister@bhpbilliton.com
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