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Property, Plant and Equipment
12 Months Ended
Dec. 31, 2018
Property Plant And Equipment [Abstract]  
Property, Plant and Equipment

5.  Property, Plant and Equipment

Property, plant and equipment at December 31 were as follows:

 

 

2018

 

 

2017

 

 

 

(In millions)

 

Exploration and Production

 

 

 

 

 

 

 

 

Unproved properties

 

$

394

 

 

$

520

 

Proved properties

 

 

3,124

 

 

 

3,162

 

Wells, equipment and related facilities

 

 

26,173

 

 

 

25,550

 

 

 

 

29,691

 

 

 

29,232

 

Midstream

 

 

3,492

 

 

 

3,219

 

Corporate and Other

 

 

39

 

 

 

53

 

Total — at cost

 

 

33,222

 

 

 

32,504

 

Less: Reserves for depreciation, depletion, amortization and lease impairment

 

 

17,139

 

 

 

16,312

 

Property, Plant and Equipment — Net

 

$

16,083

 

 

$

16,192

 

Capitalized Exploratory Well Costs:  The following table discloses the amount of capitalized exploratory well costs pending determination of proved reserves at December 31, and the changes therein during the respective years:

 

 

2018

 

 

2017

 

 

2016

 

 

 

(In millions)

 

Balance at January 1

 

$

304

 

 

$

597

 

 

$

1,415

 

Additions to capitalized exploratory well costs pending the determination of proved reserves

 

 

128

 

 

 

116

 

 

 

79

 

Reclassifications to wells, facilities and equipment based on the determination of proved reserves

 

 

 

 

 

(165

)

 

 

 

Capitalized exploratory well costs charged to expense

 

 

(14

)

 

 

(268

)

 

 

(897

)

Dispositions and other

 

 

 

 

 

24

 

 

 

 

Balance at December 31

 

$

418

 

 

$

304

 

 

$

597

 

Number of Wells at December 31

 

 

24

 

 

 

12

 

 

 

17

 

During the three years ended December 31, 2018, additions to capitalized exploratory well costs primarily related to drilling at the Stabroek Block offshore Guyana.  Other drilling activity included the Bunga prospect in Malaysia during 2018 and in the Gulf of Mexico during 2016.  Reclassifications to wells, facilities and equipment based on the determination of proved reserves primarily related to the sanction of the first phase of Liza Field development, offshore Guyana in 2017.

Capitalized exploratory well costs charged to expense include the following:

2018:  In Canada, offshore Nova Scotia (Hess 50% participating interest), the operator, BP Canada, completed drilling of the Aspy exploration well, which did not encounter commercial quantities of hydrocarbons.  As a result, we expensed well costs totaling $120 million of which $106 million were incurred and expensed in 2018.

2017:  In Ghana, at the Hess operated offshore Deepwater Tano/Cape Three Points license (Hess 50% license interest), management determined in the fourth quarter of 2017 that it would not develop the previously discovered fields.  As a result, we recorded a charge of $268 million to write-off previously capitalized exploration wells.

2016:  At the Hess-operated Equus natural gas project, offshore the North West Shelf of Australia in the fourth quarter of 2016, we terminated a joint front-end engineering study with a third-party natural gas liquefaction joint venture and notified the Australian government of our intent to defer the project.  As a result, we expensed all well costs associated with the project, including an exploration well completed in the second quarter of 2016, totaling $830 million.  These properties were sold in 2017.  In the second quarter of 2016, we expensed costs associated with two exploration wells at the non-operated Sicily project in the Gulf of Mexico where hydrocarbons were encountered but we decided not to pursue the project due to the low commodity price environment and the limited time remaining on the leases.  We also expensed the cost of an unsuccessful exploration well at the non-operated Melmar project in the Gulf of Mexico, where noncommercial quantities of hydrocarbons were encountered.

The preceding table excludes exploratory dry hole costs of $151 million in 2018 (2017: $0 million; 2016: $167 million), which were incurred and subsequently expensed in the same year.  In 2018, these costs are associated with the Aspy well, offshore Nova Scotia, Canada, the Pontoenoe-1 well, offshore Suriname, the Sorubim-1 well on the Stabroek Block, offshore Guyana, and the Bunga Teruntum-1 well in North Malay Basin.

Exploratory well costs capitalized for greater than one year following completion of drilling were $267 million at December 31, 2018, separated by year of completion as follows (in millions):

2017

 

$

97

 

2016

 

 

 

2015

 

 

166

 

2014

 

 

 

2013

 

 

4

 

 

 

$

267

 

Gulf of Mexico: Approximately 45% of the capitalized well costs in excess of one year relates to the appraisal of the northern portion of the Shenzi Field (Hess 28% participating interest) in the Gulf of Mexico, where hydrocarbons were encountered in the fourth quarter of 2015.  Following exploration and appraisal drilling activities completed by the operator in prior years on adjacent blocks to the north of our Shenzi blocks, the operator is planning to acquire 3D seismic in 2019 for use in development planning of the northern portion of the Shenzi Field.

Guyana:  Approximately 35% of the capitalized well costs in excess of one year relates to the Liza-4, Payara-1, Payara-2 and Snoek-1 wells on the Stabroek Block, offshore Guyana (Hess 30%), where hydrocarbons were encountered.  The operator plans to integrate the Liza-4 discovery into the second phase of development, which is expected to commence production by mid-2022.  The operator plans to integrate the Payara-1 and Payara-2 discoveries into the third phase of development, which is expected to commence production as early as 2023.  The Snoek discovery is expected to produce into the Liza Phase 1 FPSO under a subsequent phase of development.

JDA:  Approximately 15% of the capitalized well costs in excess of one year relates to the JDA in the Gulf of Thailand (Hess 50%) where hydrocarbons were encountered in three successful exploration wells drilled in the western part of Block A-18.  The operator has submitted a development plan concept to the regulator to facilitate commercial negotiations for an extension of the existing gas sales contract to include development of the western part of the Block.

Malaysia:  Approximately 5% of the capitalized well costs in excess of one year relates to North Malay Basin, offshore Peninsular Malaysia (Hess 50%), where hydrocarbons were encountered in one successful exploration well drilled in the fourth quarter of 2015.  In 2018, we completed four exploration wells and are conducting subsurface evaluations for consideration in future phases of field development.