BP greenlights $5B Gulf of Mexico offshore drilling project

BP, a British energy major, announced on Monday its decision to proceed with a $5 billion offshore drilling project in the US Gulf of Mexico. 

This move highlights the company's dedication to rebuilding its oil and gas business in the American region.

The Tiber-Guadalupe project, a significant undertaking in the oil and gas sector, is projected to commence crude oil and natural gas production in 2030. 

Tiber-Guadalupe platform

This ambitious initiative will feature a state-of-the-art floating production platform designed with the capacity to extract and process an estimated 80,000 barrels of crude oil per day.

This project underscores a broader strategic pivot by BP, a global energy giant, towards a heightened reliance on its US operations to fuel its growth trajectory. 

This shift follows a major strategic announcement made in February, signaling a deliberate move away from previous investments in renewable energy sources. 

Instead, BP is now refocusing its core business strategy and capital allocation on its traditional strengths: oil and gas exploration and production. 

This re-emphasis on conventional energy resources is a calculated decision aimed at optimising profitability and leveraging established infrastructure and expertise in the US market. 

The Tiber-Guadalupe project is a clear manifestation of this renewed commitment to its foundational oil and gas endeavors.

Critical role

“Along with its sister project Kaskida, Tiber-Guadalupe will play a critical role in BP’s focus on delivering secure and reliable energy the world needs today and tomorrow,” Andy Krieger, BP’s senior vice president, Gulf of America and Canada, said in a press release. 

The initial phase of the Tiber and Guadalupe fields is projected to yield approximately 350 million barrels of oil equivalent in recoverable resources, BP said in the release. 

Future phases may involve drilling additional wells, pending further assessment.

BP's target for US upstream output by 2030 is over 1 million barrels of oil equivalent per day (boepd). 

This accounts for just under half of its global production goal for the same year, which is set between 2.3 million and 2.5 million boepd. In the second quarter, as reported in August, the company's production reached 2.3 million boepd.

To enhance shareholder returns and catch up with competitors like Exxon Mobil and Shell, which have shown stronger performance recently, the energy major is actively working to bridge this gap.

Production targets

BP aims to boost its Gulf production to a minimum of 400,000 boepd by 2030, an increase from last year's 341,000 boepd.

Tiber-Guadalupe is set to become BP's second project in the Gulf of Mexico to utilize ultra-high pressures of 20,000 pounds per square inch, representing a significant technological advancement.

Chevron was the first US oil producer to drill at the same pressure as the Tiber-Guadalupe project, achieving this last year with its Anchor project. 

Meanwhile, BP anticipates development costs for Tiber-Guadalupe to be approximately $3 per barrel lower than its nearby Kaskida project, thanks to utilising 85% of the same design.

BP said: