BP IS to go ahead with the US$9bn Mad Dog Phase 2 project in the deepwater Gulf of Mexico just over 300 km south of New Orleans, US.
The Mad Dog field was discovered by BP in 1998, with production beginning in 2005. Further appraisal drilling from 2009–11 showed that the field contains an estimated 4bn boe. Mad Dog Phase 2 will include a second floating production platform around 9.5 km southwest of the existing platform in 1,400 m deep waters, and is expected to produce 140,000 bbl/d of crude from 14 wells. Production is expected to begin in late 2021.
Currently, the Mad Dog field produces 80,000 bbl/d of oil and 60m ft3/d of gas. After the appraisal drilling of the resource was completed in 2011, BP, the field’s operator, with a 60.5% stake, and project partners BHP Billiton (23.9%) and Chevron affiliate Union Oil Company of California, (15.6%) decided to invest further. However, in 2013, it was decided that the design they were working on was too expensive and too complicated. The partners and contractors have now standardised and simplified the design, reducing the cost by 60%, keeping it profitable even at lower oil prices.
“Mad Dog Phase 2 has been one of the most anticipated projects in the US deepwater and underscores our continued commitment to the Gulf of Mexico. The project team showed tremendous discipline and arrived at a far better and more resilient concept that we expect to generate strong returns for years to come, even in a low oil price environment,” said Richard Morrison, president of BP’s Gulf of Mexico business.
BP chief executive Bob Dudley added that the announcement shows that large deepwater projects can still be profitable even with low oil prices.
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