By comparison, the company's capital expenditure program was $3.3 billion in 2001. The reduced spending level reflects currently weak commodity prices for oil and gas.
"With energy prices where they are today, it's going to be an opportunity-building year, not a production-building year," said John N. Seitz, Anadarko president and chief executive officer.
"This budget is designed to maintain company-wide production at current levels, and to grow the inventory of opportunities that we can take advantage of when energy prices recover -- hopefully in the second half of 2002," Seitz said.
"Last year we ran more than 90 Anadarko-operated rigs at our peak; for the first half of 2002, we expect to run about 45 or 50. That means we're going to scale back spending substantially almost everywhere, except in places like Alaska, Algeria and Qatar, where we have ongoing field development projects."
In its $2 billion budget, Anadarko has allocated nearly $1 billion to worldwide development projects, primarily for fields in the Gulf of Mexico, Western Canada, East and Central Texas, North Louisiana, the Rocky Mountains and Algeria.
Roughly $500 million is budgeted for exploration programs, mainly in the Gulf of Mexico, East Texas, North Louisiana, Alaska, Western Canada, Congo and Australia. About 75 percent of the exploration budget will go toward drilling, up from 60 percent in 2001. The remainder will be used for seismic and lease acquisitions.
The budget also includes more than $100 million for infrastructure construction and another $400 million for capitalized interest and exploration and development costs.
Anadarko has budgeted approximately $370 million for projects in the Gulf of Mexico during 2002. The Gulf will be the company's single most active area for exploration this year, with an exploration budget of almost $200 million, or 40 percent of company-wide exploration outlays.
"We have five high-potential exploration wells spudded in late 2001 that we are still drilling, and we're planning nine more during 2002, including one subsalt and five conventional exploration wells on the Shelf," Seitz said.
The company plans to drill three deep-water exploration wells near the Marco Polo discovery, where Anadarko is partnering with El Paso Energy Partners to install a floating production facility. If successful, these three wells would be developed in connection with the Marco Polo project.
The company has budgeted $171 million to drill and complete 11 development wells in the Gulf during 2002, including two deep-water wells at Marco Polo, one subsalt well on the Shelf and a number of conventional wells on the Shelf near the company's South Marsh Island and Ship Shoal area complexes.
A total of $455 million is budgeted for U.S. onshore development and exploration programs this year.
In East Texas and North Louisiana, Anadarko has earmarked approximately $170 million for exploration and development of the Bossier natural gas play, where gross production reached 347 million cubic feet a day at year-end 2001. The company plans to drill 52 new development wells and 12 exploration wells this year as part of a 12-rig program.
"The Bossier is one of the areas where we'll focus on building a drilling inventory and identifying new reserves through exploration and step-out drilling, rather than growing production," Seitz said. "As a result, production from the Bossier is expected to decline this year, but this will be offset by increases in production from places like Canada, Algeria and Qatar.
"We continue to be very excited about future opportunities in the Bossier play -- particularly in North Louisiana, where our Vernon field recently achieved 'giant' field status. We estimate gross ultimate recovery from Vernon will be 1 trillion cubic feet of gas," Seitz said.
Inventory-building also will be the focus in Central Texas, where the company expects to drill 43 development wells and five exploration wells as part of a five-rig program. Anadarko has been adding reserves and production from its original Austin Chalk/Giddings field by drilling to deeper Georgetown, Buda and Glen Rose formations and by re-completing and fracturing existing Austin Chalk wells. The company has budgeted approximately $87 million for these projects in 2002.
In the Rocky Mountains, recently acquired 2-D and 3-D seismic data will be used to evaluate additional exploration potential in the western Overthrust, mountain fronts and deep basin gas plays of the eastern Green River Basin in southern Wyoming. Infill drilling in the Wamsutter natural gas field and coalbed methane development in Wyoming and Utah make up the majority of this year's Rockies development program.
Fourteen exploration wells and 212 development wells are planned as part of an overall $91 million capital program for this region. "The Rocky Mountains is another area where we'll mainly be laying the foundation for a more active 2003, by exploring the acreage base and working on engineering of future projects and permitting future drilling areas," Seitz said.
"Despite reduced spending in the Rocky Mountains, however, we expect to see modest production growth, as production continues to increase from our coalbed methane projects drilled in 2000 and 2001."
Anadarko will drill its first company-operated exploration well on the North Slope, Altamura No. 1, near the Moose's Tooth discovery as part of an overall $108 million capital program in Alaska for 2002.
"Our focus this year will be to further delineate and evaluate the Moose's Tooth field," Seitz said. "In addition to our exploration well, Anadarko will participate in four delineation wells at the discovery with our operating partner, Phillips."
One delineation well also will be drilled this winter to expand the limits of the Nanuk discovery, which was declared commercial in early 2001. Two exploration wells are planned elsewhere on the North Slope in partnership with Phillips. Anadarko also will conduct both 2-D and 3-D seismic surveys in the Brooks Range foothills to prepare for exploratory drilling expected in 2003 and beyond. Approximately $40 million of Alaska's total capital program is budgeted for additional field infrastructure and for development wells at the Alpine field. Twenty wells will be drilled from the second of two pads in the field. This program is expected to increase average oil output from Alpine from 87,000 barrels a day (gross) in 2001 to nearly 100,000 barrels a day in 2002. Anadarko holds a 22 percent working interest.
Exploration in Canada will be concentrated mainly on deep basin gas plays in Central and Northwest Alberta, in Northeast British Columbia and in the southern portion of the Northwest Territories. Approximately 50 exploration wells are planned for Canada in 2002. The company's $270 million overall capital budget for Canada includes approximately $190 million for development and infrastructure projects that will increase production in Northeast British Columbia and the deep basin. Development programs will also continue in the heavy oil area of Northeast Alberta and shallow gas fields of Southwest Saskatchewan. Approximately 382 development wells are planned. Production from Canada is expected to increase nearly 7 percent in 2002.
Anadarko has budgeted $160 million for Algeria -- primarily for production facilities construction and development drilling of existing fields. Anadarko will participate in 63 development wells in Blocks 404 and 208 and in the Ourhoud field. Oil production from the Block 404 satellite fields -- HBNSE, BKNE, RBK, QBN and BKE -- is expected to begin in the third quarter of 2002, and first oil is expected from Ourhoud in early 2003. With the start-up of the satellite fields in 2002, Anadarko's gross production capacity from Algeria is expected to increase to more than 285,000 barrels a day. Anadarko will restart exploration drilling this year and will acquire as much as 680 miles of new 2-D seismic data to define future exploration prospects in the Berkine Basin of Algeria.
In other international activity, Anadarko plans to launch new offshore exploration drilling programs in Qatar, Congo and Australia.
Approximately $80 million is budgeted for construction of production facilities and for development drilling in the Al Rayyan field in Qatar, which Anadarko acquired in August as part of the Gulfstream Resources Canada Ltd. acquisition. Gross production is expected to increase from 12,000 to 35,000 barrels a day in early 2003. Anadarko holds a 65 percent working interest.
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