Chevron authorizes big project in deep Gulf
Chevron said Thursday that it will move forward with the massive Anchor project in the deepwater Gulf of Mexico that carries an initial development cost of $5.7 billion, potentially kicking off a new wave of investment in the Gulf.
The California energy major authorized the Gulf’s next big platform project while describing it as the first-ever high-pressure development in the deep-water Gulf. The project will drill wells at 5,000 feet of depth, with the capability of handling record-high pressures of 20,000 pounds per square inch.
The high-pressure technology is expected to open up other avenues of growth within the Gulf, Chevron said, now that new equipment can withstand the ultra-high pressures in certain regions of the deep-water Gulf.
“This decision reinforces Chevron’s commitment to the deep-water asset class,” said Jay Johnson, Chevron’s executive vice president for upstream.
Although more than 80 percent of the total Gulf projects during the past five years have been expansion projects, the authorization of Anchor shows that big, new developments can still work economically in the Gulf, said the en
ergy research firm Wood Mackenzie.
Justin Rostant, an analyst at Wood Mackenzie, said the project marks a major milestone for high-pressure technology in the Gulf and the wider offshore industry. The next wave of higher-pressure projects are located within the Gulf in an area known as the inboard lower tertiary region, to the west of most existing deepwater developments. Anchor is southwest of New Orleans and 140 miles off the Louisiana coastline.
Chevron and its minority partner in the project, the French energy major Total, said they have reduced the project costs by one-third from the last generation of deep-water Gulf developments by using standardized designs and equipment specifications instead of designing projects from scratch and customizing components.
Total also said it is proceeding with engineering and design work on developing its North Platte field in the deep-water Gulf, which would include building a new floating production platform. This could be the next big Gulf project after Anchor, although it won’t be fully authorized until 2021 with its minority partner, the Norwegian company Equinor.
Louisiana-based LLOG
Exploration may opt to proceed with its Shenandoah project — another highpressure development — next year, before construction begins at North Platte. Both the North Platte and Shenandoah fields also are in the inboard lower tertiary region.
As for the Anchor field, it is located in the Green Canyon area of the Gulf within the lower tertiary. The first stage of the Anchor development consists of building
a semi-submersible floating production platform and drilling a seven wells. The project is expected to come online in 2024.
The Anchor project is designed to produce up to 75,000 barrels of crude oil and 28 million cubic feet of natural gas per day. The total potentially recoverable oil-equivalent resources for Anchor are estimated to exceed 440 million barrels.
Earlier this week, Chevron listed the Gulf as its third-highest funding priority heading into 2020 after West Texas’ booming Permian Basin and the big Tengiz oil field in Kazakhstan. Chevron owns nearly 63 percent of the Anchor project. while Total holds just more than 37 percent.
Other major Gulf projects currently under construction include BP’s Mad Dog Phase 2 development and Royal Dutch Shell’s Vito project.