BP's Mad Dog Major FID in Gulf of Mexico
Sole standalone in a sea of tiebacks: BP's Mad Dog is the only major final investment decision (FID) in deepwater Gulf of Mexico this year, says Wood Mackenzie.
On 1 December 2016, BP (60.5% and operator) sanctioned the Mad Dog Phase II development in the deepwater Gulf of Mexico (GoM). BP and partners BHP Billiton (23.9%) and Chevron (15.6%) operate the Mad Dog field, which began production in January 2005.
The second phase commercialises southern segments of the field that were discovered in 2009 and 2011. The project was first evaluated in 2012 and has been through multiple revisions as the partners honed in on an optimal development solution. Wood Mackenzie expects first production in late 2021.
Wood Mackenzie's current view is that the project breaks even at US$47/bbl Brent (real, NPV10), however, reserves upside and further project efficiencies could bring this down to US$40/bbl. For BP, Phase II is another step towards re-engineering its portfolio to operate at current oil prices and balance value and volume.
While BP has reached a FID on Mad Dog Phase 2, BHP Billiton and Chevron, for the Union Oil Company of California interest, are expected to make a final investment decision in the future.
BP discovered the Mad Dog field in 1998 and began production there 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 barrels of oil equivalent, spurring the need for another platform at the field.
