Processing Magazine

Chevron Lowers 2008 Production Outlook

February 1, 2008
The Associated Press reported recently that Chevron Corp. said "major" project delays have lowered its outlook for 2008 production by about 150,000 barrels of oil per day.

The second-largest U.S. oil company forecast production of about 2.65 million barrels of oil per day this year, down from its earlier outlook of 2.8 million barrels of oil equivalent per day issued in March.

The figure is just over 1 percent higher than 2007 production, but factors in "major capital project delays" and higher oil pricing, Chief Executive Dave O''Reilly said in an earnings conference call on Friday. Chevron is assuming an average price of $70 per barrel, but if crude prices remain at current levels around $90 per barrel, the company will cut production even further.

Project delays include Chevron''s discovery project in Tahiti, whose production schedule has been pushed back to 2009, and a slower ramp up for a project in Kazakhstan. However, O''Reilly reiterated a forecast of 3 percent increases in production, on average, between 2005 and 2010.

During the call, O''Reilly also reported that Chevron increased reserves by about 10 percent to 15 percent last year. The reserve replacement ratio for 2007 will be "low," he said, because of high oil prices, asset sales and project delays.

Reserve replacements represent the ratio of reserves found over production for a given period. The company will not issue its reserve-replacement ratio until the end of the month, though analysts typically say it should average more than 100 percent over a three- to five-year period to indicate growth. Chevron has not fully replaced reserves since 2003.