BP sanctions Mad Dog Phase 2 project
BP has approved the $9-billion Mad Dog Phase 2 project in the deepwater Gulf of Mexico.
Mad Dog Phase 2 will include a newfloating production platform with the capacity to produce up to 140,000 b/d of crude oil from up to 14 production wells. Oil production is expected to begin in late 2021.
The second Mad Dog platform will be moored about 6 mi (10 km) southwest of the existingMad Dog platform, which is located in 4,500 ft (1,372 m) of water about 190 mi (306 km) south of New Orleans. The current platform has the capacity to produce up to 80,000 b/d of oil and 60 MMcf/d of natural gas.
In 2013, BP (operator with 60.5% working interest) and co-owners,BHP Billiton (23.9%) and Union Oil Company of California, an affiliate of Chevron U.S.A. Inc. (15.6%), decided to re-evaluate the project after an initial design proved too complex and costly.
Since then, BP has worked with co-owners and contractors to simplify and standardize the platform’s design, reducing the overall project cost by about 60%. Today, the $9-billion project, which also includes capacity for water injection, is projected to be profitable at or below current oil prices.
Bob Dudley, BP Group CEO, said: “This announcement shows that big deepwater projects can still be economic in a low price environment in the US if they are designed in a smart and cost-effective way.
“It also demonstrates the resilience of our strategy which is focused on building on incumbent positions in the world’s most prolific hydrocarbon basins while relentlessly focusing on value over volume.”
While BP has reached a final investment decision onMad Dog Phase 2, BHP Billiton and Chevron are expected to make a final investment decision in the future.
BP discovered theMad Dog field in 1998 and began production there with its first platform in 2005. Continued appraisal drilling in the field during 2009 and 2011 doubled the resource estimate of the field to more than 4 Bboe, spurring the need for another platform at the field.
Richard Morrison, president of BP’s Gulf of Mexico business, said: “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.”
BP says it plans to add about 800,000 boe/d of new production globally from projects starting up between 2016 and 2020.