Chevron Delays $3.5 Billion Tahiti Project In GOM - Faulty Shackles - Startup Date Now Unknown

[hatrack]

June 28 (Bloomberg) -- Chevron Corp., the second-largest U.S. energy company, said its $3.5 billion Tahiti oil project in the Gulf of Mexico will be delayed after shackles that connect the production platform to the seafloor were found to be faulty. New shackles are being ordered to ensure the platform is safe and reliable, Mickey Driver, a spokesman for San Ramon, California-based Chevron, said today. He said it's not known how long it will take to finish the project, which had been scheduled to begin pumping oil in mid-2008.

The Tahiti field would have accounted for 38 percent of Chevron's new output next year, said Ryan Todd, an analyst at Deutsche Bank Securities Inc. Another deepwater development in the Gulf, the $3 billion Jack project, was delayed when Chevron said this month it would postpone drilling because of a rig shortage. Tahiti is the company's most costly U.S. oil project. ``This is a big hit,'' said Todd, who rates Chevron shares at ``sell'' and doesn't own any. ``Tahiti was incredibly important to Chevron's growth profile. Certainly, this is a big negative for their '08 story.''

Tahiti, discovered in 2002, is one of five major fields that Chevron was expected to tap next year to get its oil and natural-gas production growing, said Philip Weiss, an analyst at Argus Research Corp. in New York. The company's production has dropped an average of 1 percent annually in the past five years.

If you're going to put a $3.5 billion project of that magnitude in the middle of the Gulf of Mexico, you want everything just right,'' said Driver, the spokesman. ``We don't know at this point how long all of this is going to take.''

EDIT

http://www.bloomberg.com/apps/news?pid=20601207&sid=aqCOQMTRZ43I&refer=energy

[Tandalayo_Scheisskopf]

1. A nice way...

To maintain cover on keeping those prices up there. The field must be bigger than they are letting on.

[hunter]

3. On the downslope of world oil production you have to manage prices carefully.

Otherwise you introduce oscillations into the system that can shake the economic machine apart.

The game now is to keep your oil in the ground as long as you can, but not so long that the demand for it fades away.

You want the dollar value of your oil reserves to appreciate faster than other potential investments, since there's more profit to be had in letting the value of your oil simply appreciate than selling oil that oil at a lower price than your competition.

Of course you don't want to alarm your customers to the point that they might consider other energy sources, so you make stuff up about technical difficulties and shortages of refinery capacity.

It is very unlikely that this oilfield is large enough to change the rules of this horrifying end game in any way. The bridge is out ahead, but there's no way to stop a train that's driven solely by profits. In our current political system the positive feedback of corporate profits overwhelms any regulations that might bring this doomed train to a stop before it flys off the tracks and into the abyss.

[Tandalayo_Scheisskopf]

4. Are you absolutely certain...

That the phrase "on the downward slope" is not an injected meme from the oil companies and OPEC? I am not.

[hatrack]

5. The Oil Drum is your friend

Though the commentary can get a bit loopy, the main articles and oil industry professional contributors (Euan Mearns, Fractional Flow, Professor Goose, etc.) meet pretty high standards of discourse. It can be technically dense and at times a bit dry.

That said, it's the best peak oil site I know.

http://www.theoildrum.com

[hunter]

6. At this point I don't think we even have to look at the geology.

The behaviors of the big oil producers indicate very strongly we have reached the peak.

But even putting those observations aside on the minuscule chance that they might be bluffing this time, just as the California electric power network was gamed during our "rolling blackouts," even then peak oil is still on our doorstep. We can adapt our politics to cope with Peak Oil now while this economy is still limping along, or we can adapt after the economy has collapsed into a 1930's style Great Depression or hyperinflation.

[kedrys]

2. That's so horrible - not

I have a personal axe to grind with those guys, so forgive me for being vaguely happy that this is happening.