• 5 minutes Iran Says It Arrested 17 CIA Spies, Some Sentenced To Death
  • 9 minutes Will We Ever See 100$+ OIL?
  • 13 minutes Iran downs US drone. No military response . . Just Destroy their economy. Can Senator Kerry be tried for aiding enemy ?
  • 18 hours Iran Loses $130,000,000 Oil Revenue Every Day They Continue Their Games . . . .Opportunity Lost . . . Will Never Get It Back. . . . . LOL .
  • 11 mins Platts says if Iran's 2 mm bbls exports comes back on market oil goes to $40 . . . What about new Permian pipelines 2.47 mm bbls coming ? . . . WHAT IF BOTH IRAN AND PERMIAN TOTAL 4.47 mm added bbls . . . OMG !
  • 10 hours Renewables provided only about 4% of total global energy needs in 2018
  • 3 hours Today President Trump Questioned U.S. Policing the Straits of Hormuz for Rich Asian Countries. Allies Britain and Japan were asked to participate. Said NO. US spends $100 Billion/year Protecting Mideast Shipping Lanes!
  • 7 hours So You Think We’re Reducing Fossil Fuel? — Think Again
  • 31 mins Millions of Barrels of Iranian Oil Are Piled Up in China’s Ports
  • 2 hours N.Y. Governor Signs Climate Bill
  • 7 hours Oil Giant Saudi Arabia Is Set to Start First Wind-Power Plant
  • 7 hours EIA Reports Are Fraudulent : EIA Is Conspiring With Trump To Keep Oil Prices Low
  • 1 day Berkeley becomes first U.S. city to ban natural gas in new homes
  • 20 hours U.S. Administration Moves To End Asylum Protections For Central Americans
  • 1 day How is E&P of Marginal Oil on the UKCS Similar to the Shale Oil Operations in the US?
  • 1 day Shale Oil will it self destruct?
Alt Text

Russian Crude Could Still Be Dirty By Mid-2020

Polish refiner PKN Orlen has…

Alt Text

Colombia’s Push To Triple Proven Oil & Gas Reserves

Colombia’s new government sees the…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

BP Bets Big On Gulf Of Mexico While Rivals Chase Shale

BP, the biggest oil producer in the U.S. Gulf of Mexico, has just announced that it is expanding the development at one of its fields, unlocking additional production from its offshore U.S. platforms, while the American supermajors look to significantly boost their output from the hottest shale play, the Permian.

Nearly a decade after the 2010 Deepwater Horizon disaster, BP bets big on the Gulf of Mexico to grow its global production of ‘high-margin oil’, as its executives say.

To be sure, BP has recently secured shale assets in the United States after buying last year oil and gas assets in the Permian, the Eagle Ford, and Haynesville from BHP in what the UK supermajor described as a “transformational acquisition” and one of its biggest deals in the past two decades.  

But BP is not putting all its eggs in one (shale) basket. It continues to expand its Gulf of Mexico deepwater production, which requires a lot of upfront investment but which—once operational—can produce a steady stream of oil for years and decades to come, unlike shale production where well productivity declines over time.

So BP believes that it is worth it to pay the hefty upfront cost for future deepwater production in the ‘high-margin’ Gulf of Mexico.

On Monday, the company announced that it had sanctioned development of the Thunder Horse South Expansion Phase 2 project in the deepwater Gulf of Mexico. BP will add two new subsea production units two miles to the south of the existing Thunder Horse platform with two new production wells in the near term. The project is expected to add an estimated 50,000 gross barrels of oil equivalent per day (boe/d) of production at its peak at the existing Thunder Horse platform, with first oil expected in 2021, BP said. Related: Trump’s Dangerous Oil Price Game

The Thunder Horse expansion project “also highlights our continued growth and momentum in a region that will remain a key part of BP’s global portfolio for years to come,” said Starlee Sykes, BP’s regional president for the Gulf of Mexico and Canada.

BP expects its Gulf of Mexico production to reach some 400,000 boe/d by the mid-2020s. Since 2013, BP’s production in the region has risen from 200,000 boe/d to more than 300,000 boe/d at present.

BP didn’t reveal how much the latest expansion would cost, but according to The Times, the Thunder Horse investment is likely to be somewhere around the US$1.3 billion Atlantis Phase 3 development in the Gulf of Mexico, expected to add 38,000 boe/d at its peak and to come online in 2020.

At the time when BP announced the Atlantis Phase 3 development in January this year, it also said that thanks to advanced proprietary seismic imaging and reservoir characteristics analysis, BP has now identified an additional 1 billion barrels of oil in place at its Thunder Horse field, and an additional 400 million barrels of oil in place at the Atlantis field.

“BP’s Gulf of Mexico business is key to our strategy of growing production of advantaged high-margin oil,” Bernard Looney, BP’s Upstream chief executive said in January.  

Investment in U.S. federal deepwater Gulf of Mexico, where companies have driven down costs and breakevens since the downturn, is viewed as a potentially good hedge against the decline in well productivity in the shale business, people familiar with BP’s decision making told Reuters.

With the BHP asset acquisition, BP is done for the time being with shale deals, CEO Bob Dudley told CNBC last week. Related: China Set To Defy U.S. Sanctions On Iran

The U.S. supermajors Exxon and Chevron, on the other hand, are heavily betting on the Permian to grow their shale production. Chevron now sees its Permian unconventional net oil-equivalent production rising to 600,000 bpd by the end of 2020, and to 900,000 bpd by the end of 2023. Exxon revised up its Permian growth plans to produce more than 1 million oil-equivalent barrels per day by as early as 2024, which would be an increase of almost 80 percent.

While BP will be working to get the most of its shale assets onshore, it’s not overlooking the deepwater Gulf of Mexico with plans to raise its production by around 100,000 boe/d by the middle of the next decade.

Although it can’t compare with the Permian in terms of growth, total oil production in the U.S. Gulf of Mexico rose to a record last year.

In the federal Gulf of Mexico, crude oil production increased by 61,000 bpd in 2018 to a record annual average of 1.74 million bpd, the EIA said last month. Producers brought online 11 projects last year, while another eight are expected to come on stream this year. The Federal Gulf of Mexico was the second-largest producing region in the U.S. in 2018, after Texas.  

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play