Chevron Corp. said it began exploring for shale gas in China, holder of the world’s biggest reserves of the fuel, and expects to start a natural gas processing plant in the country next year.
“The company signed a joint study agreement to explore for gas from shale resources in the Qiannan Basin in April and commenced seismic operations in July,” the second-largest U.S. energy company said in a filing to the Securities and Exchange Commission yesterday, without identifying its partner in the project in southwestern Guizhou province.
Chevron follows rival Royal Dutch Shell Plc in exploring for shale gas in China, which has yet to commercially produce the fuel. The San Ramon, California-based company has allocated a 2012 budget that includes $28.5 billion for exploration and production in locations including Brazil, Africa and the Gulf of Mexico as U.S. oil refining margins shrink.
The company expects to start building the second phase of a gas processing plant at Chuandongbei field, China’s largest onshore energy exploration venture with a foreign producer, in 2012, according to its filing. Chevron said the first phase of the plant in southwestern Sichuan province may start next year.
In Africa, the company said the Phase 3B project at the Escravos Gas Plant in Nigeria may be completed in 2016. Chevron had expected production at the project, designed to process 120 million cubic feet of gas a day from eight offshore fields, to start next year.
In Argentina, Chevron said it expects to drill two exploratory wells this year in the Vaca Muerta formation, targeting shale gas and tight-oil deposits.
U.S., Australian Refineries
Chevron signed an agreement this month to sell its 80,000 barrel-a-day refinery at Perth Amboy, New Jersey, to a company that it didn’t identify, according to the filing. The deal is expected to close in the second quarter. Chevron shut the plant in 2008 and has been using the facility as an import terminal.
The sale follows other companies idling or selling their plants in the northeast U.S. as rising crude prices have limited profits. ConocoPhillips closed its Tranier, Pennsylvania, facility Sept. 30, while Sunoco Inc. said Sept. 6 it was seeking to dispose of its two refineries in the state by July or shut them then if a buyer wasn’t found.
Chevron posted its biggest quarterly earnings decline in two years after its refineries lost an average of $2.2 million a day in the final three months of 2011. The shares gained 0.8 percent to close at $108.35 in New York trading yesterday.
The company said it may record a “significant” loss if its 50-percent owned Caltex Australia Ltd. alters operations at its two refineries. Caltex said Feb. 16 it aims to complete a review of its refineries in Sydney and Brisbane in about six months and that closing the facilities is an option.
Caltex, based in Sydney, wrote down the value of the refinery assets this month by A$1.5 billion ($1.6 billion) because of Asian competition and a strong Australian dollar.
“Should the review result in a decision to significantly alter the operational role” of the Caltex refineries, “Chevron may recognize a loss that could be significant to net income in any one period,” according to the company’s filing.
© Copyright 2014 Bloomberg News. All rights reserved.