BHP Billiton Board Signs Off on Investment in BP's Mad Dog Project

   By Rhiannon Hoyle 
 

SYDNEY--BHP Billiton Ltd. (BHP.AU) said its board had signed off on a $2.2 billion investment for its share of a major deep-water project in the Gulf of Mexico led by BP PLC (BP.LN).

U.K. oil major BP in December announced plans to press ahead with a project to expand production from the Mad Dog oil field, located off the coast of Louisiana, which it operates and in which it holds a 60.5% interest.

On Thursday, Anglo-Australian mining company BHP Billiton, which has a 23.9% stake in the field, said its board has approved spending for its portion of the Mad Dog Phase 2 project.

The remaining 15.6% interest in the field is held by Chevron Corp. (CVX) unit Union Oil Co. of California.

BHP has been shifting its investment focus to the petroleum sector, betting oil-and-gas markets will improve more quickly than other commodities such as iron ore. It forecasts that demand growth and natural field decline will support a recovery in oil prices in coming years.

The advancement of the major project, estimated to have a total cost of $9 billion, is the latest evidence oil companies are tentatively wading back into big-ticket projects following a downturn in global energy markets.

"Mad Dog Phase 2 is one of the largest discovered and undeveloped resources in the Gulf of Mexico, one of BHP Billiton's preferred conventional deep-water basins," said Steve Pastor, BHP's president of petroleum operations. "It offers an attractive investment opportunity for BHP Billiton and aligns with our strategic objective to build our conventional portfolio," he said.

The second phase of Mad Dog, which is expected to begin production in late 2021, would add the capacity to pump an extra 140,000 barrels a day to a project currently producing about 80,000 barrels a day of oil and about 60 million gross cubic feet of natural gas. The project involves installing a floating production facility about 6 miles from the existing platform.

Write to Rhiannon Hoyle at [e-mail]

(END) Dow Jones Newswires

February 09, 2017 02:38 ET (07:38 GMT)

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