BP outlines growth plan for deepwater US Gulf

BP has made a final investment decision (FID) on a $1.3bn expansion project at the Atlantis oil and gas field in the US Gulf of Mexico, further evidence that the deepwater sector has retained its allure for the majors.

The Atlantis phase 3 development will involve tying eight new wells back to the existing Atlantis platform, which has a production capacity of 200,000 b/d of oil and 180mn ft³/d of gas. BP expects phase 3 to start up in 2020 and to boost output from Atlantis by 38,000 b/d of oil equivalent (boe/d) at its peak.

The decision to go ahead with the expansion comes after breakthroughs in seismic technology and analysis uncovered an extra 400mn bl of oil-in-place at Atlantis. The same technology has found an additional 1bn bl at BP's Thunder Horse field in the US Gulf, paving the way for further developments there.

Atlantis and Thunder Horse are two of four large deepwater platforms BP operates in the US Gulf — Mad Dog and Na Kika are the others. The company is in the process of installing a second platform at Mad Dog, which will add 140,000 b/d of crude production capacity when it comes on stream in late 2021.

The $9bn Mad Dog 2 project, combined with recent expansions at Thunder Horse and Atlantis phase 3, should be an important source of output growth for BP over the next few years. The firm has added to its queue of potential future developments in the region after making oil discoveries at the Manuel and Nearly Headless Nick prospects. The former is within tie-back distance to the Na Kika platform, and the latter is likely to be developed as a tie-back to the Delta House platform operated by US independent LLOG.

"Only 12pc 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's upstream chief executive Bernard Looney said.

BP expects to produce around 400,000 boe/d in the deepwater US Gulf of Mexico by the middle of the 2020s, up from over 300,000 boe/d now. Exceeding 400,000 boe/d would be a significant milestone in BP's quest to rebuild following the 2010 Macondo disaster in the US Gulf. The firm's US Gulf output last exceeded 400,000 boe/d in 2009, before the spill forced it to downsize operations in the region.

BP's ambitious growth plan for its US deepwater business coincides with a major expansion into US shale. The firm completed a $10.5bn deal to buy most of UK-Australian firm BHP's US shale portfolio in October, heralding a return to the Permian basin.