BP has begun production at its Thunder Horse South expansion project ahead of schedule and under budget. The move is one of several in a series of efforts to expand BP’s production in the US Gulf of Mexico.
In the January 23 announcement, BP said a new subsea production site 2 miles (3 km) south of BP’s existing Thunder Horse production facility had been brought online. The expansion is expected to add 50,000 boepd of production at the facility.
Start-up was achieved 11 months ahead of schedule and US$150 million under budget, marking a reduction of 15% in expected costs, BP said. The cost savings were achieved through the use of standardised technologies and equipment rather than designing and producing customised systems.
Commenting on this news, Tudor, Pickering and Holt said in an analyst note: “Something that would have been unheard of a few years ago, the project was completed 11 months early (just over 2 years after sanction) and 15% under budget for US$850 [million], which implies a [capital expenditure] of US$9 per boe and demonstrates the value of [standardisation]. It also suggests to us a break-even of below US$30 per boe.”
The start-up of the expansion comes nearly two months after BP announced it was going ahead with the second phase of its Mad Dog project, also in the deepwater Gulf. The US$9 billion project will see the construction of a second platform located 6 miles (10 km) southwest of the existing Mad Dog platform. The new platform, which is due to be completed in 2021, will have a capacity of 140,000 bpd.
Earlier this month, South Korea’s Samsung Heavy Industries announced that it had won a 1.5 trillion won (US$1.3 billion) order to build a floating production unit (FPU) for Mad Dog Phase 2.
BP has set a goal of increasing its total production by 800,000 boepd by 2020 thanks to the development of several new projects.