Global and Regional MarketsNewsThe Offshore Frontier

Chevron, BP, ConocoPhillips advancing Paleogene discoveries in deepwater GOM

Chevron and BP will collaborate with ConocoPhillips to explore and appraise 24 jointly-held offshore leases in the northwest portion of Keathley Canyon in deepwater Gulf of Mexico. Chevron will be the operator.

Under the agreements, BP will sell to Chevron approximately half of its current equity interests in the Gila and Tiber fields. BP, Chevron and ConocoPhillips also have agreed to joint ownership interests in exploration blocks east of Gila known as Gibson, where they plan to drill in 2015.

“By collaborating across several prospects and discoveries, and incorporating the technologies and experience of the three companies, we expect to develop these fields in the most cost effective way and shorten the time to final investment decision and first production,” Jeff Shellebarger, President, Chevron North America Exploration and Production Company, said.

The transaction encompasses the Tiber and Gila discoveries, and the Gibson exploratory prospect. Chevron recently acquired an interest in Tiber and Gila from BP. Chevron, BP and ConocoPhillips already held interests in the Gibson prospect. The scope of the collaboration between Chevron, BP and ConocoPhillips includes further exploration and appraisal of these leases as well as evaluating the potential of a centralized production facility, which would provide improved capital efficiency, similar to Chevron’s Jack/St. Malo project. Chevron, BP and ConocoPhillips also plan to work together to achieve efficiencies in schedule, realize cost savings, and optimize the use of human resources.

“Completing these agreements will enable BP to do three things that are at the core of our strategy in deepwater Gulf of Mexico,” Richard Morrison, President of BP’s Gulf of Mexico business, said.  “It will support continued exploration and development in the Paleogene, which we expect to be a key part of our future in the region. It will allow us to manage and maintain capital discipline by sharing development costs. And transferring operatorship of these assets to Chevron will allow BP to increase our focus on maximizing production at our four existing producing hubs in the Gulf, each of which is still in the early stages of development.”

BP believes that development of portions of the Paleogene trend will require next-generation tools and systems for operating in high-pressure, high-temperature reservoirs. BP continues to pursue development of these technologies through its Project 20K initiative, announced in 2012, and will work with co-owners to continue this progress.

As a result of the agreements, BP, Chevron and ConocoPhillips will have the same working interests across Gila and Gibson and any future centralized production facility. Chevron will hold equity interest of 36%, BP will hold 34% and ConocoPhillips will hold 30%. In Tiber, BP and Chevron will each hold equity interest of 31%, with Petrobras holding 20% and ConocoPhillips holding 18%.

Project 20K is a trademark of BP

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