© CVX 2011
Global Gas
Chevron Progress in Associated Gas Utilization Focus on Kazakhstan and Angola Flare Reduction Programs
GGFR Steering Committee 30Nov2011 Babak Fayyaz Jim Wisner
© CVX 2011
Chevron Successes Part of Long-Term Integrated Flare Reduction Plan
• Chevron has fully incorporated GGFR Associated Gas
Recovery Planning processes.
• Six years of repeated annual planning, execution and
review.
• Strong integration with commercial major capital
project activities of business units.
• Strong cooperation with government programs and
development of regional infrastructure.
• 40-50% overall global reductions achieved over past 6
years.
• Major lessons learned from successes and challenges.
© CVX 2011
Example Success Stories
Kazakhstan
• 90% flaring reduction while increasing production by
150%
• Integrated planning and execution with Kazakhstan
government and Tengiz Chevroil (TCO) partners and
Major Capital Project programs
- Intentional operator-government planning to
reduce flaring while enhancing production
- Achieved with high local content
• Part of $2.2 Billion environmental improvement project
program of TCO
Additional detail on GGFR Success Story website.
© CVX 2011
Global Gas
Angola LNG: Key Insights from a Successful Associated Gas LNG Project
Prepared by: Jim Wisner, Commercial General Manager, Southern Africa, Chevron ; Chevron Lead, GGFR Steering Committee Presented by: Babak Fayyaz, Coordinator Chevron AGRP Process Washington D.C. November 29, 2011
4
© CVX 2011
Keys to A Successful Associated Gas LNG Project
1. Opportunity Identification (resource, land and
marine access)
2. Clear Project Vision
3. Government Support and Stakeholder Alignment
4. Aligned Upstream and Midstream Objectives
5. Market solution
6. Effective Project Planning and Execution
7. Environmental Mitigations
8. Host Community Acceptance
5
Early Development Phase
Later Development Phases
© CVX 2011
Project Scope
Anchored by Associated Gas supply
• Future Non-Associated Gas
Gathering from multiple gas sources
Single train 5.2 mmtpa LNG plant
LNG and LPG loading facilities
7 dedicated LNG ships
Employee housing and infrastructure
Construction team of ~7,000
• ~50% Angolan
Multiple Community Projects
Key Milestones
December 10, 2007:
Final Investment Decision
LNG Ship Delivery In Progress
LNG Plant Commissioning in Progress
Q1 2012: 1st LNG cargo
Angola LNG: A Case Study in Value Chain Integration
36.4%
22.8% 13.6% 13.6% 13.6%
© CVX 2011 7
Key #1: Identify Gas Resource, Land and Marine Access
Early Angola studies found: Sufficient gas resource for reliable
supply: both associated and non-associated gas
Long term solution for associated gas required to enable continued oil development
Potential plant locations provided acceptable marine access
Sufficient LNG market demand
Project could be economically viable
Importance: LNG is only feasible with reliable gas supplies, land and port access
© CVX 2011 8
Block 15 AG
Block 17 AG
Block 0 & 14
AG & NAG
SOYO
CONGO RIVER
LOMBO EAST
CABINDA
LNG Plant
Block 15 AG
(EM)
Block 17 AG
(TOTAL)
Block 18 AG
(BP)
Block 0 & 14 AG
(CVX)
SOYO
CONGO RIVER
LOMBO EAST
One 5.2 MMTPA LNG Train
on Kwanda Island
next to Kwanda Base
CABINDA
Quiluma
NAG
Atum &
Polvo NAG
Enguia
NAG
Key #2: Clear Project Vision
Importance: A clear project vision is necessary to create stakeholder alignment and government support
Angola LNG Vision:
Gather associated gas from multiple upstream suppliers, with some participating in the LNG project
Develop a regional integrated gas solution to enable oil development
Contribute to the social and economic development of Angola.
Develop an economically viable project for all stakeholders
© CVX 2011
Key #3: Stakeholder Alignment and Government Support
ALNG aligned with Angolan government objectives and strategies
Strong support and resources from Sonangol
Solution for associated gas to enable oil development and align interests
Foundation for regional gas gathering network
Foundation for domestic gas supply by Sonangol
Significant local content
Enabling legislation and fiscal regime timed to support major project commitments
9
Importance: stakeholder alignment and government support were needed to ensure smooth project development and implementation.
© CVX 2011
Key #4: Aligned Integrated Upstream & Midstream
10
Integrated value chain aligns interests from field to LNG
Multiple sub-projects require coordinated planning
Upstream stakeholders and aligned value chain helps to ensure gas supply is reliable
Back-up non-associated gas supply
Robust value chain governance
Multiple Companies bringing resources to a large LNG project
LNG expertise
Human and financial capital
ALNG shareholders in LNG offtake chain
Importance: Close planning between upstream and midstream is necessary to ensure reliable flow of associated gas to the LNG plant
36.4% 22.8% 13.6% 13.6% 13.6%
Block 0 & 14 Gas
Block 15 Gas
Block 18 Gas
Block 17 Gas
Other Gas
Angola LNG
Shipping
International Markets
Alig
ned
In
terests
en
han
ce r
elia
bility
© CVX 2011
Key #5: Aligned Marketing Solution
11
Product offtake assurance was critical to avoid impact on oil operations
Supply competition increasing, LNG market evolving
Different marketing models were considered
Early alignment of Angola LNG shareholders on the preferred marketing model supported the final investment decision.
• For Angola LNG, 3 LNG Ships will be owned by Sonangol-E.P. Shipping Holding Ltd.
• Sonangol/Chevron ship operations joint venture
Importance: reliable market access for LNG is essential for gas flow assurance through the entire value chain.
© CVX 2011
Key #8: Host Community Acceptance
12
~US$ 1.7 billion Angolan content during project construction
~3,800 Angolans employed during the construction phase
Includes skill training
Soyo area road and bridge new construction and road refurbishment
Construction of 22 MW power plant for Soyo community
Regional hospital major expansion and refurbishment
School major expansion and refurbishment
Major community housing project
ALNG staff residential housing integrated with Soyo community
Soyo airport upgrades
Support for regional health initiatives
Multiple other community projects.
Extensive use of Soyo community services and businesses.
Importance: Acceptance by a project’s host community is critical for long term success
© CVX 2011
The Angola LNG Journey
13
July 2008 December 2009 November 2011
© CVX 2011 14
The “Early Keys” enabled Angola LNG’s Success and Can serve as a Model for any Large Scale Associated Gas Development …. November 2011
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