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BP to rethink Mad Dog phase 2 in Gulf of Mexico

BP to consider all options for Mad Dog 2 development

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolAfter the decision to stop the ongoing front end engineering and design (FEED) contracts on the Mad Dog Phase 2 project, BP and its partners, BHP Billiton and Chevron, are back to the drawing board to search for an economically acceptable solution.

Last month, BP announced to reconsider the development of the Mad Dog Phase 2 project in its actual configuration based on a single point anchor reservoir (SPAR) floating unit.

With estimated reserves of 4 millions barrels of oil equivalent (boe), the giant Mad Dog field is similar in size to Thunder Horse, BP‘s largest asset in Gulf of Mexico.

BP_mad_dog_oilgas_field-mapLocated in the block 738 of the Green Canyon, 225 kilometers (140 miles) south of Grand Isle, Louisiana, the Mad Dog Phase 2 project is planned to develop the north part of the field lying by 1,371 meters depth.

In this field BP and its partners share the working interests such as:

 – BP 60.5%

 – BHP Billiton 23.9%

– Chevron Corporation, through its subsidiary Union Oil Company of California, 15.6 %.

BP and its partners started commercial operations in 2005 with the Mad Dog Phase 1 SPAR platform that has a capacity of:

 – 100,000 b/d of oil 

 – 60 million cf/d of natural gas.

From this first successfull experience and in respect with the reserves left in the field, BP and it partners moved on the Mad Dog Phase 2 with the same concept but at larger scale since the second SPAR would have had the capacities of:

BP_BHP_Chevron_Mad_Dog-SPAR – 130,000 b/d of crude oil

 – 75 million cf/d of natural gas

But in addition to the conventional pumping and compression units, the Mad Dog Phase 2 platform must integrate the LosalTM water treatment unit.

This BPs proprietary process had been successfully developed in the UK North Sea to increase significantly the recovery rate of crude oil from the reservoir.

BP to consider semisubmersible or tension leg platform 

The principle is to inject partly desalinated water in the reservoir as it was observed in Arctic regions where the sea water is softer that it was returning higher percentage of crude oil from the field.

In the case of Mad Dog 2, this LosalTM water treatment unit should have a capacity of 280,000 b/d of water.

The addition of this equipment has a significant impact on the utilities and power generation which had to be redimensioned accordingly.  

As a result the Mad Dog 2 concept design which was originally thought just as an amplified copy of the phase 1 turns to be more complex and to inflate weight and costs in the same way. 

While the FEED work was already well in progress in Amec for the topsides, in Technip for the SPAR, in FMC Technologies for the subsea, BP and its partners were alerted by the weight of the topsides jumping from 40,000 tonnes to 47,000 tonnes.

BP_Mad_Dog_AMEC_TopsideThus, they could monitor the spiraling costs of the:

 – Topsides

 – Installation and commissioning

 – Drilling and completion

Originally pre-designed to require $10 billion capital expenditure, the actual costs estimations at FEED stage were scaling up between $18 and $20 billion, jeopardizing the entire profitability of the project.

In this context BP and its partners could only stop the project before it goes too far and come back to the conceptual study of the Mad Dog Phase 2 as a standalone brand new project.

Targeting to review all options in a period of three months, BP and its partners will compare the actual SPAR concept with a semisubmersible platform and a tension leg platform (TLP).

Alternatively, if any of these solutions could support all the required topsides at reasonable costs, BP and its partners could consider to develop Mad Dog in phases with multiple platforms.

After this period of three months to revise the conceptual study of Mad Dog 2, BP, BHP Billiton and Chevron expect to make a decision for the new architecture but with the consequence to postpone the first oil from 2018 to 2020.

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