• 6 minutes Corporations Are Buying More Renewables Than Ever
  • 17 minutes WTI @ 67.50, charts show $62.50 next
  • 23 minutes Starvation, horror in Venezuela
  • 12 hours Permian already crested the productivity bell curve - downward now to Tier 2 geological locations
  • 2 days Desperate Call or... Erdogan Says Turkey Will Boycott U.S. Electronics
  • 1 day Renewable Energy Could "Effectively Be Free" by 2030
  • 1 day Saudi Fund Wants to Take Tesla Private?
  • 4 hours China goes against US natural gas
  • 2 days Mike Shellman's musings on "Cartoon of the Week"
  • 2 days Venezuela set to raise gasoline prices to international levels.
  • 3 days The Discount Airline Model Is Coming for Europe’s Railways
  • 2 days Pakistan: "Heart" Of Terrorism and Global Threat
  • 2 days Are Trump's steel tariffs working? Seems they are!
  • 11 hours Hey Oil Bulls - How Long Till Increasing Oil Prices and Strengthening Dollar Start Killing Demand in Developing Countries?
  • 3 days Scottish Battery ‘Breakthrough’ Could Charge Electric Cars In Seconds
  • 1 day Why hydrogen economics does not work
Shale Profits Remain Elusive

Shale Profits Remain Elusive

Despite higher oil prices, U.S…

Rising Costs Force BP to Re-Evaluate $10 Billion Gulf of Mexico Project

Industry-wide, rising development costs have forced BP to re-evaluate its $10 billion oil project in the Gulf of Mexico.

The Mad Dog 2 development was set to become BP’s largest new oil project in the Gulf of Mexico for over a decade. Construction was expected to begin this year with the first oil pumped before 2020, but the rising costs have now made this plan difficult to justify, and the company has had to return to the drawing board to come up with a new plan, which will most likely involve a delay of a year or so.

The oil field at Mad Dog 2 is estimated to contain four billion barrels of oil equivalent. The project will see a second platform constructed on the field, linked to 33 new subsea wells which will extract the oil.

Related article: Finding Good Investments in Areas with Growing Oil Production

BP released a statement to explain that “the current development plan for Mad Dog Phase 2 is not as attractive as previously modelled, due largely to market conditions and industry inflation.

BP fully intends to develop the resources at Mad Dog Phase 2 and is committed to moving forward with the right plan. It is too early to speculate when the details of the final plan will be approved by BP and its co-owners.”

Increasing costs have also led other companies to abandon projects in the energy sector. Woodside Petroleum has had to rethink initial plans to build a $45 billion liquefied natural gas plant in Western Australia due to large cost over-runs. And France’s Total has had to abandon a multibillion dollar oil sands project in Canada after the venture became economically unviable.

By. Charles Kennedy of Oilprice.com



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News