BP to Proceed with Deep Water Project in Gulf of Mexico

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From The Wall Street Journal:

“LONDON— BP PLC plans to press ahead with a major deep water project in the Gulf of Mexico—the latest evidence oil companies are tentatively wading back into big-ticket projects amid signs a two-year crude-market slump is ending.

The project to expand production from the Mad Dog oil field off the coast of Louisiana has faced years of delays. BP and its partners struggled to bring down costs, contending first with high industry inflation in the boom years before 2014, and then with a catastrophic slump in oil prices.

The oil giant said it had reduced the cost of Mad Dog phase 2—as the project is known—to $9 billion, compared with $20 billion in 2013. Oil companies such as Royal Dutch Shell PLC have said recently they have successfully cut back to make even historically expensive deep water projects work at lower oil prices.

“Some people say that deep water is finished,” BP’s head of exploration and production Bernard Looney said in a presentation this summer. “We have a very different view.”

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