The latest move reflects the confidence of the British energy company to safely carry out operations in the region
As crude oil prices start to gain momentum after the OPEC deal with both West Texas Intermediate and Brent crude trading above $50 per barrel, energy companies have commenced with long delayed projects and have revamped their investments and exploration programs. For the British petroleum company, BP plc (ADR) (NYSE:BP), which recently shed off a significant portion of fines in damages linked with the Gulf of Mexico spill, good times are ahead.
As reported by Reuters, the oil giant approved the investment in the Mad Dog venture in the Gulf of Mexico. The investment worth $9 billion marks the first time that the oil and gas major has made an investment in the area since the 2010 oil spill disaster.
The latest move reflects the confidence of the British energy company to safely carry out operations in the region. We believe the decision is more of an indication that the oil produced from the region is well positioned to provide tough competition to rivals.
The latest costs of the project have decreased from more than $20 billion, as per the original estimates, to around less than $10 billion. The phase 2 of the project would commence production of crude in the second half of 2021. The project can pump nearly 140,000 barrels per day (bpd) from around fourteen wells.
Bob Dudley, CEO BP stated: “This announcement shows that big deep-water projects can still be economic in a low price environment in the U.S. if they are designed in a smart and cost-effective way.”
The Country Caller believes that the Mad Dog project is a revival in the offshore development after the oil crisis since 2014 has detrimentally impacted interest in the offshore area.