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HOUSTON—With world energy demand constantly rising, the oil and gas industry is running a marathon—not a 50-yard dash—between now and 2035, Melody Meyer, president of Chevron Asia-Pacific E&P Co. said at the February Australian-American Chamber of Commerce annual energy conference.
“Our job description remains unchanged, and it is very clear—we must deliver enough oil and gas to meet world demand,” Meyer said at the chamber’s seventh annual event.
To make that happen, “Our industry needs the confidence only long-term partnerships can provide. When energy prices fall, the value of energy partnerships rises,” she said.
About 55% of global demand will be met by oil and gas in 2035, yet meeting that need is challenged by decline rates in the ground of 4-7% annually on the existing production base, she said.
Therefore, the oil and gas industry needs to maintain its long-term focus on efficiency, cost-effectiveness, reliability and safety despite price volatility in the market, Meyer said.
“Demand for liquid fuels is expected to grow by 70% in Asia alone, so we need solutions now. Top performance has never been more important,” she said.
Chevron (NYSE: CVX) is an example of that focus, as it will soon bring online two world-class LNG projects at Gorgon and Wheatstone offshore Western Australia, despite huge cost overruns and changing LNG values. LNG is tied to crude oil prices, which have tanked since June.
The Gorgon LNG export project is nearly complete and first gas is expected to move through facility by mid-2015. Some 13 of 17 Train 2 modules are on their foundations at the site and both LNG tanks are ready. Upstream, the subsea facilities and pipelines are complete and all 18 subsea wells have been drilled and completed. Pre-commissioning of the domestic, land pipeline is underway and the jetty is complete as well.
Gorgon will have a capacity of 15.6 million tonnes per annum (MMtpa), with Chevron the operator and owner of 47.3%. ExxonMobil (NYSE: XOM) and Shell (NYSE: RDS-A, RDS-B) are the other two major partners, along with smaller interests owned by three end-users in Japan and Korea.
The Wheatstone project is on track for start-up in 2016 and about 55% complete. The facility will have capacity for 15 MMtpa.
Combined, the two projects have a price tag of about $50 billion, including expenditures on Australian goods and services over the next 30-year period that will benefit Australia. In addition, Chevron plans to further develop Perth as a regional technical hub, Meyer said. It has already funded four university chairs and spent $44 million on area R&D since 2007.
Contact the author, Leslie Haines, at lhaines@hartenergy.com.
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