BP looks for growth in Gulf, starts new field

BP has started production at a key new oil operation under more than a mile of water in the Gulf of Mexico, where it expects production to peak at 60,000 barrels a day of oil equivalent, the company said Tuesday.

Production started up on June 3 at the Galapagos development, which currently includes three wells that BP owns jointly with Noble Energy, Red Willow and Houston Energy, BP said.

It is located about 140 miles southeast of New Orleans, far from its namesake Galapagos Islands in the Pacific Ocean, and is under about 6,500 feet of water. The project began development in 2006, but one of the wells, the Santiago, was the first to receive a permit after a moratorium was lifted following the 2010 oil spill at the BP-owned Macondo well.

“The start-up of this project in the Gulf of Mexico is one of BP’s key operational milestones for 2012, one of six high-margin projects we expect to come on stream this year,” CEO Bob Dudley said in a statement. “I expect that the operational progress we are now making will deliver increasing financial momentum for BP as we move into 2013 and 2014.”

Despite the 2010 spill, for which the company is still engaged in restoration efforts and settlement negotiations, BP has continued to bank on major hydrocarbon developments in the Gulf of Mexico.

The company said it is the largest leaseholder in the Gulf, with more than 650 leases, and has interests in more than 20 fields there.

“The Galapagos development marks another significant step forward for BP in the Gulf of Mexico, and reflects the potential we continue to see in this world-class basin, now and in the future,” James Dupree, regional president of BP’s U.S. Gulf of Mexico business, said in a statement.

The Galapagos development includes the Isabela, Santiago and Santa Cruz fields.

Noble Energy discovered the Santiago prospect last year while using a Ensco 8501 drilling rig. Noble is operating the Santiago and Santa Cruz fields, while BP is operating the Isabela field, BP said.

BP has a 56 percent stake in the project. It is the first new development to come online for BP since the spill, although the company has drilled and begun production at a new well this year in the existing Thunder Horse development.