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Chevron sanctions Anchor project in Gulf
GULF OF MEXICO
CALIFORNIA-BASED Chevron has made a final investment decision (FID) on its Anchor project in the US Gulf of Mexico. The super-ma- jor announced on December 12 that the initial development at Anchor would require around $5.7bn of investment, and that first oil was antic- ipated in 2024.
Anchor is the industry’s first deepwater high-pressure development to reach FID, Chev- ron said in a statement. The new technology that will be deployed for the project is capable of handling pressures of 20,000 psi. Delivery of this technology will also allow access to other high-pressure resource opportunities across the Gulf for Chevron and others, the super-major added.
The announcement came in the same week that Chevron said it anticipated a $10-11bn impairment charge in the fourth quarter of this year, related in large part to its shale gas assets in the Appalachian Basin. (See: One step forward, two steps back for Kitimat LNG, page 4) The com- pany is aiming to keep its 2020 spending flat at $20bn but is looking at scaling back its invest- ment in certain gas assets, including by selling them.
However, the FID on Anchor suggests that Chevron is more optimistic about the long- term prospects of certain deepwater assets. The company said its budget for next year supported investments that included “an advantaged queue of deepwater opportunities in the Gulf ”. How- ever, it noted that a downward revision in its oil price outlook had resulted in an impairment at Big Foot, another deepwater project.
The Anchor field is located in the Green Can- yon area of the Gulf, roughly 140 miles (225km) off the coast of Louisiana, in water depths of
around 5,000 feet (1,524 metres). The first stage of the project consists of a seven-well subsea development and semi-submersible floating production unit. It comes as new developments are still relatively rare in the Gulf, while subsea tiebacks are popular, as they allow operators to boost production at a comparatively low cost. Chevron is pursuing both options.
“This decision reinforces Chevron’s commit- ment to the deepwater asset class,” Chevron’s executive vice-president of upstream, Jay John- son, said in a statement. “We expect to continue creating value for shareholders by delivering stand-alone development projects and subsea tie-backs at a competitive cost,” he added.
“For new projects in the Gulf of Mexico, we
have reduced development costs by nearly a
third, compared to our last generation of green-
field deepwater investments,” said Chevron’s
president of North America exploration and deepwater production, Steve Green. “We’re doing this by
standardising equipment, utilising fit-for-pur-
pose surface facilities that require less capital
and employing drill-to-fill strategies. At Anchor,
we streamlined our front-end engineering and
design [FEED] phase and are utilising more
industry standards in our designs and equip-
ment to lower costs while maintaining opera-
tional excellence.”
The planned Anchor facility has a design capacity of 75,000 barrels per day (bpd) of crude and 28mn cubic feet (792,960 cubic metres) per day of natural gas. The total potentially recover- able resources at Anchor are estimated to exceed 440 million barrels of oil equivalent (boe).
Chevron operates Anchor with a 62.86% working interest, while France’s Total holds the remaining 37.14% stake.™
Anchor is the industry’s first
high-pressure development to reach FID.
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w w w . N E W S B A S E . c o m Week 50 18•December•2019