BP plc, the largest acreage holder in the deepwater Gulf of Mexico (GOM), will postpone some of its big projects offshore to concentrate on completing the long-delayed Thunder Horse and Atlantis subsea structures.
According to the Financial Times (FT), BP was reportedly postponing indefinitely other GOM projects, including Tubular Bells, Dorado and Puma. The company has prioritized Thunder Horse and Atlantis, but it had no comment on whether other projects have been shelved.
“Like other operators, we are adjusting our project plans in the face of resource constraints and significant inflation in the oilfield service sector,” a BP spokesman told FT. CEO Tony Hayward, who took the reins in May, wants to put the company’s “difficulties behind him.”
A trial is under way in Houston concerning an explosion at BP’s Texas City, TX, plant that killed 15 workers. U.S officials this year have opened a separate criminal investigation into corrosion problems at the BP-operated Prudhoe Bay oilfield in Alaska (see NGI, Oct. 30, 2006), and a House committee is looking into allegations by BP employees that the company allowed natural gas in a Prudhoe Bay plant to reach a level almost double the size of the facility’s design capacity (see NGI, July 9).
Additionally, federal investigators are probing BP’s energy trading unit, specifically reviewing traders’ possible manipulation of propane markets in 2004 and trades in gasoline and crude-oil markets (see NGI, Aug. 13).
In one of his first public statements, Hayward said in July that operational issues would take priority at BP (see NGI, July 30). The management team began reviewing all of the oil major’s worldwide operations to improve performance, safety and overhead costs about three months ago.
The Thunder Horse field is located on Mississippi Canyon Blocks 778 and 822. Once online, the platform will be capable of producing 250,000 b/d of oil and 200 MMcf/d of natural gas. The Atlantis field lies on Green Canyon Block 699. Its platform will be capable of processing 200,000 b/d of oil and 180 MMcf/d of gas.
The Atlantis project is currently scheduled to ramp up by the end of this year. BP pushed back the start-up set for last year after discovering problems in the subsea manifolds of Thunder Horse, which is a similarly designed platform. BHP Billiton Ltd., which holds a 44% stake in Atlantis, estimated in January that ultimate costs for Atlantis would be at least 50% higher than first estimated; the platform system originally was estimated to cost $3.5 billion (see NGI, Jan. 29).
Thunder Horse has suffered from several delays. Last year BP executives said Thunder Horse was rescheduled to ramp up by the end of 2008, three years later than initially planned (see NGI, Sept. 25, 2006). To ensure the new timetable remains intact for Thunder Horse, BP is said to have made precautionary purchases as a contingency measure, including 9,000 feet of flowlines.
The cause of the delay was the need to repair and replace components in the subsea system following a failure during precommissioning checks, according to BP. The equipment had passed all the normal industry standard tests and regulatory requirements, but when BP conducted more prolonged and rigorous testing, as an additional safety precaution, a failure occurred on a weld in one of the subsea manifolds.
In addition to its Thunder Horse and Atlantis projects in the deepwater GOM, BP owns or has stakes in several other deepwater projects that already are under way, including Mad Dog, Marlin, Horn Mountain, Na Kika, Pompano and the Mardi Gras pipeline.
BP is the largest acreage holder in the deepwater GOM, owning more than 650 gross blocks in water depths of 1,200 feet or more. Net production currently exceeds 350 MMboe/d. In June BP also announced another discovery in its Isabela prospect offshore. The well is located on Mississippi Canyon Block 562 in 6,500 feet of water, about 150 miles southeast of New Orleans. It likely will be tied back to the NaKika production platform.
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