Gulf of Mexico producers think small

Megaprojects have fallen out of fashion and cheaper tieback developments are in. It’s enough to keep the region’s output growing, for now

The downturn has exposed a dividing line between producers in the Gulf of Mexico’s (GoM) deep waters: those who own the infrastructure to get oil out of the ground and those who don’t. Few companies are in the mood to spend. Chevron has shelved its Buckskin and Moccasins deep-water production hub development while BP has hit the pause button on its second Mad Dog floating-production hub. The development model of choice is the cheaper option of tying back discoveries to existing hubs, which typically produce well below their nameplate capacity. Connecting a field to existing infrastructure can knock about $10 a barrel off a project’s breakeven price compared to new infrastructure, reckons IHS