After a few years of relatively light activity in the Gulf of Mexico, Chevron said last week it is again looking at potential large new deepwater developments—two of them off the Louisiana coastline.
As S&P Global reports, during the industry downturn that began in late 2014 from US oil prices that had dropped near the $50 per barrel level after hovering in the low $100s earlier that year, Chevron focused on shorter lead-time projects with a faster payback.
But it is now ready to take on a selected few projects requiring higher capital expenditures and potentially years to bring on stream. In the past few years, industry has learned how to lower the costs of those projects through phased designs, improved construction and better supply chain logistics.
One of Chevron’s projects of interest is the much-watched Anchor discovery, located in the Gulf’s Green Canyon area offshore Louisiana. As S&P Global reports it’s a high-temperature, high-pressure field that requires some fancy technology to produce it. Industry produces ultra-deepwater wells typically at a limit of 15,000 pounds per square inch (psi) of pressure, but Anchor and a few other US Gulf discoveries are at the 20,000 psi level.
A final investment decision is slated for early next year.
In the early stages of evaluation is the Chevron-operated Ballymore, located offshore Louisiana’s “big toe” to determine resource sizes.
“We’re targeting unit development costs of $16/b to $20/b for the Gulf of Mexico,” Jay Johnson, Chevron’s executive vice president for upstream, said during the company’s second-quarter earnings conference call.