BP has approved plans to spend $9 billion on a new oil-production platform at one of its largest deep-water fields in the Gulf of Mexico, the company said Thursday.
The green light for the second phase of BP’s Mad Dog field comes three years after the company delayed plans to assemble a massive $20 billion oil-production spar in the region. The British firm redesigned the project and cut costs by more than half during a two-year oil bust that forced companies to shelve multibillion-dollar offshore projects. OPEC signaled it’s trying to bring the oil-price slump to an end on Wednesday with its first oil-production cut in eight years.
“Big deep-water projects can still be economic in a low price environment in the U.S. if they are designed in a smart and cost-effective way,” said Bob Dudley, BP’s chief executive, in a written statement.
BP said it could drill up to 14 wells and believes the deep-water platform would be able to pump as many as 140,000 barrels of oil a day, starting in 2021. The company estimates the Mad Dog field holds 4 billion barrels of oil.
Its partners Chevron and Australian company BHP Billiton, which together own nearly 40 percent of the Mad Dog project, are expected to make a final decision on the investment in the first quarter.