US oil giant Chevron has cut its production forecasts after warning it expects to suffer rising costs and project delays over the next few years.
Initial forecasts of 3.3 million barrels of oil per day output by 2017 have now been lowered to 3.1million, as the company looks to sell up to £6billion of assets over the next three years.
The company, which confirmed it expects the Clair Ridge development in the North Sea to begin production by 2016, said it had slowed development of its US shale gas projects due to low prices.
“Our plan for production growth is solid and will be driven by near-term project ramp-ups as well as our larger major capital projects which begin starting up later this year,” said Chevron upstream senior vice president Jay Johnson.
“These projects are attractive, and when combined with profitable production growth from our shale and tight resource developments, are expected to add over 800,000 barrels of oil equivalent per day by 2017.
“We also have a deep queue of other growth opportunities which should allow us to continue growing production to the end of the decade.”
One opportunity that remains in doubt, however, is the Rosebank field. Last year the US oil giant admitted the current cost associated with the $10billion project, around 80km north-west of Shetland, was not worthwhile.
At an investor’s presentation today, Chevron confirmed it still evaluating the project as it looked to find ways to make the 100,000 barrels of oil per day prospect economically viable. Start-up for the project would be between 2017 and 2020.
The company said it had passed a peak in capital expendituure last year, with overall spend set to be reduced over the next three years. It had targeted $10billion (£6bn) in divestments by 2017 – compared to $7illion between 2011 and 2014.
The moves would put the company in a good position to grow production, despite the reduced forecasts for the next three years.
“World energy demand continues to grow and the outlook for the energy business remains excellent,” said Chevron chief executive John Watson.
“Our strategies are sound, and we’re poised to deliver significant production growth through the end of the decade.”
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