| Thu 28 Apr 2005, 9:25 | | QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT |
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Bhp billiton plc - BHP Billiton quarterly report on exploration and development
activities January 2005 - March 2005
Bhp billiton plc
Share code BIL
Isin: GB0000566504
28 April 2005
Ref: 19/05
BHP BILLITON QUARTERLY REPORT ON EXPLORATION AND DEVELOPMENT ACTIVITIES
January 2005 - March 2005
This report covers exploration and development activities for the quarter ended
31 March 2005. 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.
The industry is currently operating in an environment where the services and
supplies necessary to execute its projects are in great demand, and as a result,
delivery of projects to budget and schedule is becoming more challenging. A
weakening US dollar combined with the demand for raw materials and hence
significant levels of project activity are leading to labour shortages and
rising input costs (such as steel, heavy machinery, fuel and other commodities).
BHP Billiton continues to work with its suppliers, contractors and other
stakeholders to mitigate the effect of these cost pressures where possible. We
have been successful to date. However, whilst all of our projects are currently
tracking in line or ahead of schedule, some will run over original Board
approved budgets.
PETROLEUM DEVELOPMENT
Atlantis South Development, Gulf of Mexico, USA (BHP Billiton 44%, non-operated)
In February 2005, BHP Billiton approved a revised budget of US$1.1 billion for
the development of the Atlantis South oil and gas reserves. The Atlantis South
development will have a gross nameplate daily capacity of 200,000 barrels of oil
and 180 million cubic feet of natural gas. During the quarter the production
platform`s hull left the shipyard in South Korea and installation of suction
piles has commenced on site. The project remains on schedule for first
production in the third quarter of 2006.
MINERALS DEVELOPMENT
Aluminium
Worsley Development Capital Projects (DCP), Australia (BHP Billiton 86%)
The Worsley Alumina Development Capital Projects were approved in May 2004 with
a budget of US$192 million (US$165 million BHP Billiton share). The projects
will increase alumina capacity by 250,000 tonnes per annum (215,000 tonnes per
annum BHP Billiton share) to 3.5 million tonnes per annum (3.01 million tonnes
per annum BHP Billiton share). Overall the projects are greater than 40 per
cent complete. Engineering and procurement activities are nearing completion
and site activities have increased with a number of major contractors mobilised
to undertake mechanical and electrical construction work. Commissioning of the
DCP is scheduled for the first quarter of 2006.
Base Metals
Escondida Norte, Chile (BHP Billiton 57.5%)
The development of the Escondida Norte pit, located approximately 5 kilometres
north of the existing Escondida mining operations, was approved in June 2003 as
part of Escondida`s operating strategy to maintain copper production capacity in
future years. Pre-mine waste stripping continued during the quarter with total
material movement to the end of March 2005 equalling 166 million tonnes. During
the period, work on the crushing station and both silo structures continued and
installation of the overland conveyor belt commenced. Commissioning of the
electrical power distribution system is well advanced and control systems
integration of the Escondida Norte ore into the existing mineral distribution
system has commenced. Overall project progress is on schedule at approximately
79 per cent complete with pre-mine development, design and construction
activities on track to meet first ore delivery to the crusher in the fourth
quarter of 2005. Development costs are estimated at US$400 million (BHP Billiton
share US$230 million).
Escondida Sulphide Leach, Chile (BHP Billiton 57.5%)
The Escondida Sulphide Leach project was approved in April 2004. The project
will produce 180,000 tonnes (103,500 tonnes BHP Billiton share) of copper
cathode per annum, utilizing a bacterially assisted leaching process on low-
grade run-of-mine ore from both the Escondida and Escondida Norte pits. The
resulting solutions will then be treated in conventional solvent extraction and
electrowinning plants. Detailed engineering and procurement activities are
substantially complete. Construction underway includes the leach pad base
preparation, the sea water desalination facilities and the solvent extraction
and electrowinning civil foundations. Development costs are estimated at US$870
million (US$500 million BHP Billiton share) and production is scheduled to begin
during the second half of 2006.
Spence, Chile
The Spence Project, approved in October 2004, will be a new open cut mine with
associated plant facilities capable of producing 200,000 tonnes per annum of
copper cathode through a combination of chemical and bacterial leaching. All
major equipment is being fabricated with some equipment now starting to arrive
on site. The road relocation is complete and construction of initial camp and
office facilities continues. The power line and main substation along with mine
support facilities are also under construction. The major earthworks contracts
have been awarded and hiring of personnel for mine operations is nearing
completion. Development costs are estimated at US$990 million and production is
scheduled to begin during the last quarter of 2006.
Carbon Steel Materials
Dendrobium Coal Project, Australia
The Dendrobium Mine will be a low cost underground longwall operation capable of
producing 5.2 million tonnes per annum of raw coal (3.6 million tonnes per annum
of clean coal). Longwall production commenced on 3 April 2005, eight weeks
ahead of schedule. Production commissioning was completed on 19 April 2005 and
the ramp up of longwall operations is now underway. Outstanding project works
include the completion of the coal fines dryer and installation of a sizer for
run of mine coal. Development costs, revised in October 2004, are estimated at
US$200 million. As the project has now been successfully commissioned, it will
no longer be included in this report.
Rapid Growth Project 2, Australia (BHP Billiton 85%)
The Rapid Growth Project 2 (RGP2) was approved in October 2004. The project
comprises increases in mine, rail and port capacity through the development of
Ore Body 18, purchases of additional rolling stock and a new car dumper at
Finucane Island. Engineering activities are well advanced, tendering procurement
processes are underway and initial site activities have commenced. The project
will increase installed capacity at Western Australian Iron Ore to 118 million
tonnes per annum by the second half of 2006. Development costs are estimated at
US$575 million (BHP Billiton share US$489 million).
Diamonds and Specialty Products
Panda Underground Project, EKATI Diamond Mine, Canada (BHP Billiton 80%)
The Panda Underground Project, approved in May 2004, will be a 2,600 tonnes per
day sub-level retreat mine that will deliver approximately 4.6 million tonnes of
ore and 4.7 million carats of high value Panda diamonds to the EKATI process
plant over a 6 year production life. Underground mine development is progressing
to schedule while construction activities associated with the mine surface
facilities are nearing completion. All four ventilation shafts have been
completed. First ore production was successfully achieved to schedule on 26
April 2005, with full production expected in early 2006. Development costs are
estimated at US$182 million (BHP Billiton share US$146 million).
Stainless Steel Materials
Ravensthorpe Nickel Project, Australia
The Ravensthorpe Nickel Project was approved in March 2004. The project includes
the development of a mine, treatment plant and associated infrastructure near
Ravensthorpe in Western Australia.
The Ravensthorpe processing plant will produce a mixed nickel-cobalt hydroxide
intermediate product (MHP). Engineering and procurement activities are
proceeding to schedule. On site, the major concrete pours to date have been
completed, access roads are open to traffic, all the construction camp
accommodation modules are in place, and bulk earthworks progress is enabling the
mobilisation of oncoming contractors. Development costs are estimated at
US$1.05 billion, with the first shipment of MHP expected by the second quarter
of 2007.
Yabulu Extension Project, Australia
The Yabulu Extension Project was approved in March 2004. The metal refining
section of the QNI Yabulu refinery near Townsville in Queensland is being
expanded to process up to 220,000 tonnes of MHP. This additional processing
capacity will increase refinery production to 76,000 tonnes of nickel and 3,500
tonnes of cobalt. Engineering and procurement activities are proceeding to
schedule. The site infrastructure, site-wide piling, concrete and first tank
contracts have been awarded. Site work commenced during the period, with
activity on infrastructure and tankage underway. Development costs are estimated
at US$350 million, with first nickel metal production from the expanded Yabulu
refinery expected by late 2007.
PETROLEUM EXPLORATION
Exploration and appraisal wells drilled during the quarter or in the process of
drilling as at 31 March 2005.
WELL LOCATION BHP BILLITON STATUS
EQUITY
Scarborough-3, 4a Australia, 50% BHP Billiton Plugged and abandoned.
& 5 Exmouth and operator(1)1 Hydrocarbons
Plateau encountered.
West Moonfish-1 Australia, 50% BHP Plugged and abandoned.
Gippsland Billiton; Esso Hydrocarbons
Basin operator encountered.
Mad Dog Southwest Gulf of 23.9% BHP Hydrocarbons
Ridge & Mexico, Billiton; encountered. See
Sidetracks 1 & 2 Green Canyon BP operator NewsatBHPBilliton dated
825 23 March 2005.
Joseph-1 Gulf of 20% BHP Drilling ahead.
Mexico, Billiton;
High Island Shell operator
Block 10L
Blackbeard West-1 Gulf of 5% BHP Billiton; Drilling ahead.
Mexico, Exxon operator
South
Timbalier
Block 168
Mustang Gulf of 43.66% BHP Drilling ahead.
Mexico, Billiton and
West Cameron operator
77 OCS-G-
9387 #2
Shenzi-4 Gulf of 44% BHP Billiton Plugged and abandoned.
Mexico, and operator Hydrocarbons
Green Canyon encountered.
653
Knotty Head-1 Gulf of 25% BHP Drilling ahead.
Mexico, Billiton;
Green Canyon Unocal operator
512
Makalu-1 Gulf of 30% BHP Temporarily plugged and
Mexico, Billiton; abandoned.
Mississippi Chevron Texaco
Canyon Block operator
937
BHP Billiton operated and funded 100% of the activity.
MINERALS EXPLORATION
The Minerals Exploration group of BHP Billiton continued to pursue global
exploration opportunities for key commodities of interest utilising both in-
house capabilities and the Junior Alliance Programme.
Exploration drilling continued on diamond targets in Botswana, Namibia and
Angola; on porphyry copper targets in Chile and Peru; and on nickel targets in
Canada. Exploration for iron ore, coal and bauxite was undertaken in a number of
regions including Australia, India, Brazil and West Africa.
EXPLORATION EXPENDITURE
During the quarter, BHP Billiton spent US$31 million on minerals exploration,
all of which was expensed (US$93 million gross and US$92 million expensed year
to date), and US$106 million on petroleum exploration, of which US$77 million
was expensed (US$243 million gross and US$132 million expensed year to date).
Further information on BHP Billiton can be found on our Internet site:
http://www.bhpbilliton.com
Australia
Jane Belcher, Investor Relations
Tel: +61 3 9609 3952 Mobile: +61 417 031 653
email: Jane.H.Belcher@bhpbilliton.com
Tania Price, Media Relations
Tel: +61 3 9609 3815 Mobile: +61 419 152 780
email: Tania.Price@bhpbilliton.com
United Kingdom
Mark Lidiard, Investor & Media Relations
Tel: +44 20 7802 4156 Mobile: +44 7769 934 942
email: Mark.Lidiard@bhpbilliton.com
Ariane Gentil, Media Relations
Tel: +44 20 7802 4177 Mobile: +44 78 81 51 8715
email: Ariane.Gentil@bhpbilliton.com
United States
Tel: +1 713 599 6100 Mobile: +44 20 7802 4031
email: Mark.Lidiard@bhpbilliton.com
South Africa
Michael Campbell, Investor & Media Relations
Tel: +27 11 376 3360 Mobile: +27 82 458 2587
email: Michael.J.Campbell@bhpbilliton.com
_______________________________
1 BHP Billiton operated and funded 100% of the activity.
Date: 28/04/2005 08:53:39 AM
Produced by the JSE SENS Department
