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Chevron Sanctions First Deepwater Ultra-High-Pressure Development

Chevron has sanctioned its Anchor deepwater development in the Green Canyon area of the US Gulf of Mexico—the first ultra-high-pressure project requiring 20-ksi operating pressure.

The planned facility, where production startup is expected in 2024, has a design capacity of 75,000 B/D of crude oil and 28 MMcf/D of natural gas. Located 225 km off Louisiana in 1,524 m of water, the Anchor Field has total potentially recoverable oil-equivalent resources of more than 440 million bbl.

The initial development of the project will require an investment of $5.7 billion. Stage 1 consists of a seven-well subsea development and semisubmersible floating production unit.

Chevron said delivery of the high-pressure technology will enable access to other high-pressure resource opportunities across the gulf for the company and the industry.

“This decision reinforces Chevron’s commitment to the deepwater asset class,” said Jay Johnson, Chevron executive vice president, upstream.

“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.

“We’re doing this by standardizing equipment, utilizing fit-for-purpose surface facilities that require less capital, and employing drill-to-fill strategies,” Green said. “At Anchor, we streamlined our front-end engineering and design phase and are utilizing more industry standards in our designs and equipment to lower costs while maintaining operational excellence.”

Consultancy Wood Mackenzie noted that Anchor is Chevron’s first greenfield final investment decision (FID) as an operator since it sanctioned Big Foot and Jack/St Malo in the US gulf in 2010, adding that the decision will kickstart the next wave of investments in the US gulf.

"The Anchor project reaching FID marks a major milestone for advanced technology in the US Gulf of Mexico and the wider offshore industry,” said Justin Rostant, an analyst with Wood Mackenzie’s Gulf of Mexico team.

“Chevron’s sanction of the Anchor project shows that the US Gulf of Mexico still offers attractive investment opportunities for large greenfield developments,” he said. “While over 80% of projects sanctioned in the last 5 years are shorter-cycle subsea tiebacks, standalone developments like Anchor are still able to compete for development capital.

“Anchor is the first of three 20-K projects that Wood Mackenzie expects to reach FID within the next 18 months. We estimate that these three projects combined hold approximately 1 billion BOE in reserves and will require over $10 billion of capital investments,” Rostant said. Another of those projects, the Total-operated North Platte development, has entered the front-end engineering and design phase and is targeted for FID in 2021.    

Wood Mackenzie values Anchor at $1.5 billion with a development-cycle Brent crude oil breakeven price of $51/bbl.

Chevron is operator of the Anchor project with a 62.86% interest. Total holds a 37.14% interest.

Chevron Sanctions First Deepwater Ultra-High-Pressure Development

12 December 2019

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