Chevron greenlights Anchor in the deepwater Gulf of Mexico

Chevron Corp. has sanctioned the $5.7-billion Anchor project in the deepwater US Gulf of Mexico.

Anchor is in the Green Canyon area of the Gulf of Mexico.
Anchor is in the Green Canyon area of the Gulf of Mexico.
(Map courtesy Chevron)

Offshore staff

SAN RAMON, California – Chevron Corp. has sanctioned the $5.7-billion Anchor project in the deepwater US Gulf of Mexico.

This marks the industry’s first deepwater high-pressure development to achieve a final investment decision.

Delivery of the new technology, which is capable of handling pressures of 20,000 psi, also enables access to other high-pressure resource opportunities across the Gulf of Mexico for the company and the industry, Chevron said.

The Anchor field is in the Green Canyon area, approximately 140 mi (225 km) off the coast of Louisiana, in water depths of about 5,000 ft (1,524 m). Stage 1 of the Anchor development consists of a seven-well subsea development and semisubmersible floating production unit. First oil is expected in 2024.

The planned facility has a design capacity of 75,000 bbl of crude oil and 28 MMcf/d of natural gas. The total potentially recoverable oil-equivalent resources for Anchor are estimated to exceed 440 MMbbl.

The semisubmersible FPU is expected to have a design capacity of 75,000 bbl of crude oil and 28 MMcf/d of natural gas.The semisubmersible FPU is expected to have a design capacity of 75,000 bbl of crude oil and 28 MMcf/d of natural gas.(Courtesy Chevron)

Chevron, through its subsidiary Chevron U.S.A. Inc., is operator and holds a 62.86% working interest. Co-owner TOTAL E&P USA, Inc. holds 37.14% working interest.

Jay Johnson, executive vice president, Upstream, Chevron Corp., said: “This decision reinforces Chevron’s commitment to the deepwater asset class. We expect to continue creating value for shareholders by delivering stand-alone development projects and subsea tiebacks at a competitive cost.”

Steve Green, president of Chevron North America Exploration and Production, added: “For new projects in the Gulf of Mexico, we have reduced development costs by nearly a third, compared to our last generation of greenfield deepwater investments.

“We’re doing this by standardizing equipment, utilizing fit-for-purpose surface facilities that require less capital and employing drill to fill strategies. At Anchor, we streamlined our front-end engineering and design phase and are utilizing more industry standards in our designs and equipment to lower costs while maintaining operational excellence.”

Anchor is Chevron’s first greenfield final investment decision as an operator since its sanction of Big Foot and Jack/St Malo in 2010.

Justin Rostant, an analyst with Wood Mackenzie’s Gulf of Mexico team, said: “The Anchor project reaching FID marks a major milestone for advanced technology in the US Gulf of Mexico and the wider offshore industry.”

Rostant said: “Chevron’s sanction of the Anchor project shows that the US Gulf of Mexico still offers attractive investment opportunities for large greenfield developments.

“While over 80% of projects sanctioned in the last five years are shorter-cycle subsea tiebacks, standalone developments like Anchor are still able to compete for development capital.

“Anchor is the first of three 20-K projects that Wood Mackenzie expects to reach FID within the next 18 months. We estimate that these three projects combined hold approximately 1 Bboe in reserves and will require over $10 billion of capital investments.”

Wood Mackenzie values Anchor at $1.5 billion (NPV 10) with a development-cycle breakeven of $51/bbl (PV 10, Brent).

12/12/2019

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