Chevron said on Thursday it had approved the development of a deepwater high-pressure oil project in the Gulf of Mexico, which will require US$5.7 billion investment for the initial development, in the industry’s first such deepwater high-pressure project to have reached a final investment decision (FID).
Chevron sanctioned the development of the Anchor field in the Green Canyon area, some 140 miles off the coast of Louisiana, in water depths of approximately 5,000 feet. During the first development stage, the project will consist of a seven-well subsea development and a semi-submersible floating production unit. First oil from Anchor is expected in 2024.
The facility at Anchor is designed to have capacity of 75,000 barrels of crude oil and 28 million cubic feet of natural gas per day. According to Chevron, the total potentially recoverable oil-equivalent resources at Anchor are estimated to top 440 million barrels.
Chevron is the operator of the Anchor field with a 62.86-percent working interest, while Total’s U.S. unit holds the remaining 37.14-percent working interest.
“For new projects in the Gulf of Mexico, we have reduced development costs by nearly a third, compared to our last generation of greenfield deepwater investments,” said Steve Green, president of Chevron North America Exploration and Production.
“This decision reinforces Chevron’s commitment to the deepwater asset class,” said Jay Johnson, executive vice president, Upstream, Chevron Corporation.
Chevron’s new project sanction comes a day after the U.S. supermajor announced that it would write down US$11 billion in assets in the fourth quarter, following a downward revision of its long-term forecast for oil and gas prices. Much of the write down is connected to natural gas assets in the Appalachia basin, due to the low natural gas prices.
Chevron—like the other U.S. supermajor Exxon—is heavily investing in the Permian basin, looking to significantly boost oil production, but it has yet to turn a positive free cash flow there.