Major projects have become the focus of Apache’s investments in Western Australia.
Oil production commenced in 2010 from the Apache-operated Van Gogh development in Production License WA-35-L located in the Exmouth Basin 32 miles (53 km) north-northwest of the town of Exmouth. Discovered in 2003, Van Gogh was Apache's first field development utilizing a floating production, storage and offloading (FPSO) vessel, the Ningaloo Vision. The FPSO has capacity to process 150,000 barrels of liquids per day, including 63,000 barrels of oil per day, and store 540,000 barrels of oil. Apache also owns an interest in the BHP Billiton-operated Pyrenees FPSO development offshore Western Australia.
In 2011, Apache, its co-venturer KUFPEC and Chevron approved development plans for the Chevron-operated Wheatstone LNG Project. The first phase of the project comprises two liquefied natural gas processing trains with a combined capacity of approximately 8.9 million tonnes per annum (Mtpa), a domestic gas plant and associated onshore and offshore infrastructure. Apache plans to supply gas to Wheatstone from its Julimar and Brunello natural gas fields discovered in the Carnarvon Basin in 2007. Expected investment, net to Apache, for the field and LNG facility development, including drilling, transportation, and other infrastructure, is approximately $4 billion. First production is planned for 2016.
Apache also began a new round of acquisition activity in 2010. Over a three-year period, the company acquired $17 billion in assets across almost all of its regions.
The company merged with Mariner Energy for $2.7 billion plus assumption of $1.2 billion in debt. The Mariner merger brought assets in the Deepwater Gulf of Mexico and the Permian Basin. Apache also acquired assets from BP in the Permian Basin (West Texas and southeast New Mexico), western Canada, and Egypt for $7 billion. BP decided to sell assets in order to fund its response to the Deepwater Horizon Oil Spill.
Apache became an early advocate for transparency in hydraulic fracturing operations and began posting the composition of its frac fluids at FracFocus.org, a joint venture of the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission, in 2011.
In 2012, Apache expanded its holdings in the North Sea with acquisition of Exxon Mobil Corporation's Mobil North Sea Limited assets. Apache assumed operations of the Beryl, Nevis, Ness, Nevis South, Skene and Buckland fields, the Beryl/Brae gas pipeline and the SAGE gas plant. The transaction also included non-operated interests in the Maclure, Scott and Telford fields.
The 2012 acquisition of Cordillera Energy Partners – a transaction that strengthened the company’s position across the Anadarko Basin in western Oklahoma and the Texas Panhandle by adding 312,000 net acres in the liquids-rich Granite Wash, Tonkawa, Cleveland and Marmaton plays. The additional acreage and increasing productivity from horizontal, multi-stage fractured wells enabled Apache’s Central Region to emerge as one of the company’s important growth engines.
The acquisitions and technological advances in horizontal drilling and hydraulic fracturing shifted the focus of Apache’s growth strategy from international operations to onshore North American oil and liquids-rich plays in the Permian and Anadarko basins. In a 2010 reorganization, Apache split its Permian operations from its Central Region (headquartered in Tulsa, Oklahoma) and opened a Permian Region office in Midland, Texas. By 2013, Apache was the most active operator in the Permian Basin.
Apache commenced production from the Reindeer Field through the Devil Creek Gas Plant in 2012. The project, a $1.1 billion investment by Apache (55%) and co-venturer Santos (45%) located in the northwest of Western Australia, includes the Reindeer gas field, wellhead platform and raw gas pipeline, the Devil Creek Gas Plant and the Devil Creek Sales Gas Export Pipeline that ties into the Dampier to Bunbury Natural Gas Pipeline. The gas plant – Western Australia’s third domestic gas processing facility – has capacity to process 200 million cubic feet of gas per day (220 Terajoules of gas per day) and 1,000 barrels per day of condensate. Apache also owns a non-operated interest in Western Australia’s fourth domestic gas plant, the BHP Billiton-operated Macedon gas plant, which commenced production in 2013.
In December 2012, Apache signed a broad agreement with Chevron to build and operate the Kitimat LNG project on the coast of British Columbia, Canada, and develop world-class shale gas resources at the Liard and Horn River basins in northern British Columbia. Chevron and Apache each became a 50 percent owner of the Kitimat LNG plant, the Pacific Trail Pipeline and 644,000 gross undeveloped acres in the Horn River and Liard basins. Chevron Canada is operator of the LNG plant and the pipeline; Apache is operator of the upstream assets.
Apache first obtained an interest in the Kitimat project in 2010. Rising gas production from U.S. shale plays led to the conclusion that monetizing Canada’s gas resources would require access to Asia’s LNG markets. This decision was affirmed by Apache’s discovery of the Liard Basin, where the company validated net estimated sales gas of 48 trillion cubic feet of natural gas across 430,000 acres.
In 2013, Apache partnered with service companies Halliburton and Schlumberger to use natural gas to power hydraulic fracturing, which is one of the most energy-intensive processes employed by the industry. Apache was the first operator to use a frac spread solely with natural gas. The company also has deployed drilling rigs powered with natural gas.
The acquisitions and technological advances in horizontal drilling and hydraulic fracturing shifted the focus of Apache’s growth strategy from international operations to onshore North American oil and liquids-rich plays in the Permian and Anadarko basins. By 2013, Apache was the most active operator in the Permian Basin and second-most-active in the Anadarko Basin.
In May 2013, Apache announced a goal to divest $4 billion in assets by year-end 2013. The company said it intended to use initial proceeds of $2 billion to reduce debt and enhance financial flexibility. Additional proceeds were intended to be used to repurchase approximately $2 billion of Apache common shares under a 30-million-share repurchase program authorized by the Board of Directors. The goal of the portfolio rebalancing was to focus on operations that generate production growth or provide cash for capital investments. Apache exceeded the $4 billion target through transactions announced or completed before the end of the third quarter of 2013.
The first major step in the rebalancing was the sale of Apache’s Gulf of Mexico Shelf operations to Fieldwood Energy Company, a portfolio company of Riverstone Holdings, for $3.75 billion in cash and assumption of liabilities for future abandonment costs of the properties with a discounted value of $1.5 billion.
On Aug. 29, 2013, Apache announced sale of a 33 percent interest in its assets in Egypt to Sinopec International Petroleum Exploration and Production Corporation for $3.1 billion effective Jan. 1, 2014; Apache said it would continue to be the operator. Although Apache’s operations in Egypt continued without interruption during the political turmoil that began in January 2011 and continued into 2013, investors had discounted the value of the Egypt assets because of the uncertainty. Apache and Sinopec said the Egypt investment was the first step in a global partnership.
Apache also announced plans to sell producing assets in Western Canada for an aggregate of $326 million in three separate transactions.