Chevron Corp.'s Dec. 12 announcement that it approved the initial $5.7 billion development of the Anchor project in the U.S. Gulf of Mexico could be the start of a wave of offshore investments using advanced technology in the region and beyond, analysts said.
The Anchor project reaching a final investment decision, or FID, "marks a major milestone for advanced technology in the U.S. Gulf of Mexico and the wider offshore industry," Wood Mackenzie analyst Justin Rostant said in a Dec. 12 statement.
Using ultra-high-pressure development requiring 20,000-pounds-per-square inch technologies, the Anchor project will be the first of its kind to reach FID, and Chevron's decision to proceed with the project shows that the Gulf of Mexico still has attractive investment opportunities for greenfield developments, Rostant said.
Anchor is the first of three 20,000-psi projects that Wood Mackenzie expects to reach FID within the next 18 months. The analysts anticipate that these projects, which hold a combined reserves total of about 1 billion barrels of oil equivalent, will require more than $10 billion in capital investments.
"While over 80% of projects sanctioned in the last five years are shorter-cycle subsea tiebacks, standalone developments like Anchor are still able to compete for development capital," Rostant said.
With a 62.86% working interest, Chevron, through unit Chevron USA Inc., will be the operator of the Anchor project. It will be built about 140 miles off the coast of Louisiana and will have a capacity of 75,000 barrels of oil per day and 28 million cubic feet of natural gas per day.
Total SA, whose subsidiary Total E&P USA Inc. will hold the remaining 37.14% working interest in Anchor, hopes to make an FID for the North Platte discovery in the Gulf of Mexico in 2021, it said in a Dec. 12 news release. Front-end engineering and design has begun for North Platte, which will also use 20,000-psi technologies.
The project, which marks Total's return to the Gulf of Mexico as an operator, will consist of eight subsea wells and two subsea drilling bases connected through two production loops to a new-build, lightweight floating production unit. Production will be exported through existing oil and gas subsea networks.
The North Platte field straddles four blocks of the Garden Banks area located 275 kilometers off the coast of Louisiana in about 1,300 meters of water. Total has a 60% working interest, while Equinor ASA has a 40% stake. Oil production from North Platte is expected to peak at an average of 75,000 bbl/d.
Total said it also holds interests with Chevron in other leases near Anchor that have exploration potential. Any discoveries on those jointly owned leases could be tied back to Anchor at competitive costs.
"The Anchor project benefits from reserves with upsides, allowing for a stand-alone development at a competitive cost," Total E&P president Arnaud Breuillac said. "These two high-pressure, [20,000-psi] projects will help to unlock the potential of the central area of the Gulf of Mexico, where Total has a strong presence."