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, the Financial Times (FT) reported late Wednesday.
Allowing the two structures to fall further behind in the production schedule would be damaging to BP, the FT reported. It cited an unnamed BP employee as its source. BP apparently has postponed indefinitely other GOM projects, including Tubular Bells, Dorado and Puma.
“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 wants to put the “difficulties behind him,” the newspaper reported. “Development delays at the two fields have cost the group dear, not only terms of the costs against a backdrop of very high prices but also its image.”
Hayward, who took the reins of BP in May, said in July that operational issues would take priority at BP (see Daily GPI, July 25). 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 Daily GPI, 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 Daily GPI, Sept. 19, 2006). To ensure the new timetable remains intact for Thunder Horse, FT reported that BP has 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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