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Released August 23, 2017 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--BHP Billiton plc (NYSE:BHP) (Melbourne, Australia), the world's biggest mining company, is following a positive report for fiscal year 2017 with a divestment from its U.S. shale oil and gas business, which have proven unprofitable. A recovery in commodity prices has boosted BHP and other mining giants, while oil prices have not improved enough to make BHP's shale properties anything more than a fifth wheel. BHP also will delay a multi-billion dollar investment in a Canadian potash project. Industrial Info is tracking more than $12 billion in active projects involving BHP.
BHP acquired the U.S. onshore shale assets in 2011 for roughly $20 billion, and Andrew Mackenzie, the chief executive officer of BHP, acknowledged in an earnings-related conference call that the company had "paid too much, and the rapid pace of early development was not optimal." But he noted the company had seen positive drilling results in the Caribbean Sea and the Gulf of Mexico, where it recently completed a $350 million offshore drilling program in the Shenzi Field. Four new infill wells will increase production 15% and extend the life of the development, which is in one of the most prosperous spots for oil and gas production in the Gulf of Mexico. For more information, see Industrial Info's project report.
BHP upped its capital spending for the 2018 financial year to $6.9 billion, following approvals for two high-value projects: Mad Dog 2 in the Gulf of Mexico, and, just last week, the Spence Growth Option at the Spence Copper Mine near Sierra Gorda, Chile. The $9 billion Mad Dog 2 Crude Oil Production Platform, which is among BHP's non-operated interests, is expected to produce 140,000 barrels per day from 14 wells. BP plc (NYSE:BP) (London, England) is the project's operator, and other companies involved include Chevron Corporation (NYSE:CVX) (San Ramon, California). For more information, see Industrial Info's project report.
In the mining sector, the Spence Growth Option centers on the $1.2 billion addition of a copper and molybdenum concentrator, which is expected to produce an average of 835,000 tons per year of copper concentrate and 7,500 tons per year of molybdenum, with first production expected in the 2021 financial year. For more information, see Industrial Info's project report. In addition to the concentrator addition, BHP is pursuing:
But BHP hit pause on one of its largest mining projects: the $2.6 billion construction of a potash mine and mill in Jansen, Saskatchewan. The first phase, which was under construction, was expected to produce 1.4 million tons per year of compacted granulated potash; two further, proposed phases, which are under prefeasibility study, would bring it up to 8 million tons per year. Executives decided that market conditions didn't support continued development, and announced they would not ask the Board of Directors for approval to proceed until conditions improved. For more information, see Industrial Info's project report.
"Demand for potash is growing," said Peter Beaven, the chief financial officer of BHP, in the conference call. "It can provide excellent margins for well-placed assets, and we have a large resource that has the potential to provide a low-cost, long-life expandable mine. While timing is uncertain, we have no doubt that the world will need new potash supply. And when it does, we believe Jansen is best-placed. But Jansen will not proceed unless it passes our strict capital allocation tests."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
BHP acquired the U.S. onshore shale assets in 2011 for roughly $20 billion, and Andrew Mackenzie, the chief executive officer of BHP, acknowledged in an earnings-related conference call that the company had "paid too much, and the rapid pace of early development was not optimal." But he noted the company had seen positive drilling results in the Caribbean Sea and the Gulf of Mexico, where it recently completed a $350 million offshore drilling program in the Shenzi Field. Four new infill wells will increase production 15% and extend the life of the development, which is in one of the most prosperous spots for oil and gas production in the Gulf of Mexico. For more information, see Industrial Info's project report.
BHP upped its capital spending for the 2018 financial year to $6.9 billion, following approvals for two high-value projects: Mad Dog 2 in the Gulf of Mexico, and, just last week, the Spence Growth Option at the Spence Copper Mine near Sierra Gorda, Chile. The $9 billion Mad Dog 2 Crude Oil Production Platform, which is among BHP's non-operated interests, is expected to produce 140,000 barrels per day from 14 wells. BP plc (NYSE:BP) (London, England) is the project's operator, and other companies involved include Chevron Corporation (NYSE:CVX) (San Ramon, California). For more information, see Industrial Info's project report.
In the mining sector, the Spence Growth Option centers on the $1.2 billion addition of a copper and molybdenum concentrator, which is expected to produce an average of 835,000 tons per year of copper concentrate and 7,500 tons per year of molybdenum, with first production expected in the 2021 financial year. For more information, see Industrial Info's project report. In addition to the concentrator addition, BHP is pursuing:
- a $400 million expansion of the copper mine, which will supply 110,000 tons per day of ore to planned primary crusher and concentration plant; for more information, see Industrial Info's project report
- a $350 million tailing dam addition, which will process effluents from the concentrator; for more information, see project report
- a $300 million seawater desalination plant, which will process 800 liters per second; for more information, see project report
- a $300 million addition of a crusher unit, which will process 110,000 tons per day; for more information, see project report
- a $250 million addition of a substation and transmission line, which will supply the crusher, concentrator and tailing dam; for more information, see project report
- a $200 million addition of a desalination plant pipeline, which will carry water 154 kilometers from the desalination plant to the new facility; for more information, see project report
But BHP hit pause on one of its largest mining projects: the $2.6 billion construction of a potash mine and mill in Jansen, Saskatchewan. The first phase, which was under construction, was expected to produce 1.4 million tons per year of compacted granulated potash; two further, proposed phases, which are under prefeasibility study, would bring it up to 8 million tons per year. Executives decided that market conditions didn't support continued development, and announced they would not ask the Board of Directors for approval to proceed until conditions improved. For more information, see Industrial Info's project report.
"Demand for potash is growing," said Peter Beaven, the chief financial officer of BHP, in the conference call. "It can provide excellent margins for well-placed assets, and we have a large resource that has the potential to provide a low-cost, long-life expandable mine. While timing is uncertain, we have no doubt that the world will need new potash supply. And when it does, we believe Jansen is best-placed. But Jansen will not proceed unless it passes our strict capital allocation tests."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
