BP has sanctioned the US$9 billion Mad Dog Phase 2 project in the Gulf of Mexico, with first production set to start in late-2021.
 |
|
Illustration of Mad Dog 2, from BP. |
The UK supermajor’s Mad Dog Phase 2 will include a new floating production platform with the capacity to produce up to 140,000 b/d of crude (gross) from up to 14 production wells.
“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,” said Bob Dudley, BP Group chief executive. “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.”
Mad Dog, one of company’s largest discoveries in the Gulf of Mexico to date, was discovered in 1998. Production began with its first platform in 2005. Continued appraisal drilling in the field during 2009 and 2011 doubled the resource estimate of the Mad Dog field to more than 4 billion boe, spurring the need for another platform at the field.
BP said that the second Mad Dog platform will be moored about 6mi to the southwest of the existing Mad Dog platform, which is located in 4500ft water depth, some 190mi south of New Orleans.
The current Mad Dog platform has the capacity to produce up to 80,000 bbl (gross) and 60 MMcf/d of natural gas (gross). BP plans to add some 800,000 boe/d (net) of new production globally from projects starting up between 2016 and 2020.
While BP has reached a final investment decision (FID) on Mad Dog Phase 2, its co-owners, BHP Billiton and Union Oil Co. of California, an affiliate of Chevron USA Inc., are expected to make a final investment decision in the future.
In 2013, BP and its partners decided to re-evaluate the Mad Dog Phase 2 project after an initial design proved too complex and costly. BP has worked with co-owners and contractors since then to simplify and standardize the platform’s design, reducing the overall project cost by about 60%. Today, the leaner $9 billion project, which also includes capacity for water injection, is projected to be profitable at or below current 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,” said Richard Morrison, president of BP’s Gulf of Mexico business. “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 is the operator of Mad Dog with 60.5% working interest. Partners BHP Billiton holds 23.9% and Union Oil Co. of California holds15.6%.
Subscribe
