Gulf push: Chevron invests $12 billion, adds jobs

10 17, 2013 by CNBC

Chevron is strategically investing in the Gulf of Mexico, spending almost $12 billion and boosting its labor force as it prepares to launch two deep-water platforms now under construction.

The platforms, Jack St. Malo and Big Foot, are named after the fields where they are located. They're both being assembled at the Kiewit Fabrication Yard in South Texas. Jack St. Malo will make its way into the Gulf by year-end, while Big Foot will head out in 2014. Both are expected to produce first oil by the fourth quarter of 2014.

Joe Gregory, Chevron's general manager of major capital projects, said the two combined will yield roughly 230,000 barrels of oil per day and called the Gulf push "a significant part of [the company's] growth strategy."

Chevron is by no means alone in investing in the Gulf. Analysts estimate that the number of platforms there will grow from 35 now to roughly 60 by the end of 2015, including strategic investments from companies such as Shell and Anadarko.

Jay Machen of Kiewit said the yard "has been very fortunate. ... It's not only been a busy summer but a busy year." He expects projects to continue through 2015.

Chevron builds its platforms big. Jack St. Malo is about 75,000 tons and will float in 7,000 feet of water, Chevron said. Big Foot will be in a field that is estimated to contain more than 200 million barrels of recoverable resources and will float in 5,000 feet.

Jack St. Malo is being outfitted with the latest in deep-water technology, including sea floor pumps, which allow it to produce oil from a great depth. Some of the technology is "focused on trying to recover additional oil from the reservoirs," Gregory said. The more Chevron produces, he added, "the better it's going to be for the shareholders and the country."

More jobs on Gulf water

The Jack St. Malo platform will have an operational staff of 60 people, which doesn't include the workers needed to design and assemble it. Jobs in the oil and gas industry are highly coveted: Globally, salaries were up 8.5 percent between 2011 and 2012, bringing the average base salary to roughly $87,300, according to the Hays Oil & Gas Global Salary Guide for 2013.

Chevron promised Wall Street that by 2017 it will produce 3.3 million barrels of oil equivalent per day, compared with 2.6 million last year. But with that boost in production comes risk and safety issues that have plagued the Gulf since the BP Deepwater Horizon disaster of 2010.

Chevron said that it puts the safety of employees and the environment first.

"We design the safety risk into the project," Gregory said. "We look at the risk and avoidance we take of making sure we can fabricate safely. We look at the verification of the designs. Those are important to make sure this facility operates safely every day."