Earlier this decade, BP and the Gulf of Mexico was an awkward and uneasy collocation for the UK oil supermajor after the 2010 Deepwater Horizon disaster.
Nearly a decade and more than US$60 billion in damages paid later, BP has now turned the corner in its U.S. Gulf of Mexico operations and plans for significant production and project expansion into the next decade.
BP’s two key pillars of growth are raising production from fields close to existing hubs, and using advanced seismic technology and analytics to better identify the resources at its oil fields in the Gulf of Mexico.
In the past few years, BP, like many other major oil companies, has been increasingly using advanced new technologies to search for more oil while cutting costs and time for seismic image analysis.
BP has created Wolfspar, a seismic source technology that can ‘see’ beneath the salt in the Gulf of Mexico to enable better planning for where to drill for oil. The tech acquires low-frequency seismic signals and could help BP to estimate how much oil there is still left in the Atlantis, Thunder Horse, and Mad Dog developments, BP executives say.
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, the UK supermajor said this week.
BP’s proprietary algorithms to enhance seismic imaging allow seismic data that would have previously taken a year to analyze to be processed in only a few weeks, the company says.
While it has identified more than a billion barrels of oil at its oil fields, BP also approved the expansion of the Atlantis field which it operates, with the US$1.3-billion Atlantis Phase 3 development as part of its strategy to grow advantaged oil production through its existing production facilities in the Gulf.
Atlantis field co-owner BHP, which holds 44 percent, is expected to make a final investment decision on Atlantis Phase 3 in early 2019.
“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 a statement.
“And these fields are still young – only 12% of the hydrocarbons in place across our Gulf portfolio have been produced so far. We can see many opportunities for further development, offering the potential to continue to create significant value through the middle of the next decade and beyond.”
BP, currently the top oil producer in the Gulf of Mexico, aims to raise its production to 400,000 barrels of oil equivalent a day (boed) by the mid 2020s, up from 300,000 boed currently. Over the past five years, the company has increased its net production by more than 60 percent from the sub-200,000 boed it was producing in 2013.
The growth is expected to come from recent project startups, including Thunder Horse Northwest and Thunder Horse South expansions and the Thunder Horse Water Injection project, plus a second platform at the Mad Dog field, scheduled to come online in late 2021.
BP will also be weighing future potential developments at Atlantis and Thunder Horse, subsea tiebacks at the Na Kika field, and Mad Dog field extensions.
It’s not only BP that is actively pursuing additional oil developments in the Gulf of Mexico. According to Wood Mackenzie, 2019 could be a historic year for the region as exploration activity is expected to increase by 30 percent, ending four consecutive years of steady declines. While Shell and Chevron will lead to way in exploration drilling, the actual growth is expected to come from new entrants--Kosmos Energy, Equinor, Total, Murphy, and Fieldwood, according to the energy consultancy.
This year could also be the year of a major world-first project to reach a final investment decision (FID), while a Gulf-first project is expected to start up production. If Chevron moves forward with its Anchor project in Green Canyon Block 807, it would be the first ultra-high-pressure project in the world to reach FID, WoodMac said, noting that if the project reaches final approval, it could lead to more than US$10 billion of investment into the region.
The industry will also be closely watching Shell’s Appomattox development, scheduled to come online this year, marking the first production ever from a Jurassic reservoir in the Gulf of Mexico.
“If the Jurassic roars to life in 2019, it could give operators greater confidence in the play’s potential,” said William Turner, senior research analyst at Wood Mackenzie.
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