Chevron, BP, ConocoPhillips join to explore, appraise Gulf of Mexico leases

Chevron Corp. subsidiary Chevron USA Inc., BP PLC unit BP Exploration & Production Inc., and ConocoPhillips Co. have pledged to work together to explore and appraise 24 jointly-held offshore leases in the northwest portion of Keathley Canyon in the deepwater Gulf of Mexico. Chevron will operate the project.

The deal includes Tiber and Gila fields, where Chevron is acquiring about half of BP’s interest, as well as the Gibson exploratory prospect, where all three companies already hold interest and plan to drill this year.

At Gila and Gibson and any future centralized production facility, Chevron will hold 36% interest, BP 34%, and ConocoPhillips 30%. In Tiber, BP and Chevron will each hold 31% interest, Petroleo Brasileiro SA (Petrobras) 20%, and ConocoPhillips 18%.

Operatorship is expected to be transferred to Chevron after BP finishes drilling appraisal wells at Gila and Tiber.

The scope of the collaboration between the companies includes further exploration and appraisal of the leases as well as evaluating the potential of a centralized production facility, which Chevron says would improve capital efficiency, similar to the company’s Jack-St. Malo project, where production began in December (OGJ Online, Dec. 2, 2014).

Chevron says the recent discovery at Guadalupe, adjacent to Keathley Canyon, could also be developed utilizing the centralized production facility (OGJ Online, Oct. 23, 2014). Guadalupe co-owners—Chevron 42.5%, BP 42.5%, and Venari 15%—will evaluate the possibility during the upcoming appraisal phase of the discovery.

Combined experience

“We will work with our co-owners to evaluate how to develop these leases, along with our recently announced discovery at Guadalupe,” said Jay Johnson, Chevron senior vice-president, upstream.

Chevron says the three companies also plan to work together to achieve efficiencies in schedule, realize cost savings, and optimize the use of human resources.

“By collaborating across several prospects and discoveries, and incorporating the technologies and experience of the three companies, we expect to develop these fields in the most cost-effective way and shorten the time to final investment decision and first production,” said Jeff Shellebarger, president, Chevron North America Exploration & Production Co.

Richard Morrison, president of BP’s Gulf of Mexico business, commented, “Completing these agreements will enable BP to do three things that are at the core of our strategy in the deepwater Gulf of Mexico. It will support continued exploration and development in the Paleogene, which we expect to be a key part of our future in the region. It will allow us to manage and maintain capital discipline by sharing development costs. And transferring operatorship of these assets to Chevron will allow BP to increase our focus on maximizing production at our four existing producing hubs in the Gulf, each of which is still in the early stages of development.”

BP discovered Tiber in 2009 via a well that reached a total depth of 35,055 ft (OGJ Online, Sept. 2, 2009); and Gila in 2013 (OGJ Online, Dec. 18, 2013).

BP operates four large production platforms in the deepwater gulf—Thunder Horse, Atlantis, Mad Dog, and Na Kika—and holds interest in four nonoperated hubs known as Ursa, Great White, Mars, and Mars B. Since early 2013, BP has had four major project start-ups in the deepwater gulf: Atlantis North, Mars B operated by Shell, Na Kika Phase 3, and Atlantis North Expansion Phase 2.

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