BP is rethinking its development plans for one of its biggest projects in the Gulf of Mexico after getting cold feet over spiralling forecast costs for a giant newbuild Spar facility, with the operator now reconsidering the use of alternative floating production solutions.

The UK major’s Mad Dog Phase 2 spar development (dubbed the ‘Big Dog’ spar) is one of the company’s ‘mega project’ flagships, but market conditions and industry inflation have prompted it to delay the start of work on the floating production facility and subsea infrastructure for an unspecified amount of time. DI hears the forecast total costs emerging from work in the ongoing FEED (Front End Engineering and Design) stage were rising to close on double the originally estimated figures to around $18 Bn.

Despite firmly restating its intent to develop the resources at Mad Dog Phase 2, it also stated it is committed to moving forward with the “right plan”, which means the current large moored truss spar concept is no longer the favoured option.

With other floating production options such as FPSOs now viable options in the GoM, DI hears that BP is weighing up a smaller scale phased approach for the second phase development of Mad Dog’s considerable resources, including FPSO and scaled-down spar solutions, as well as reconsidering semisubmersible and Tension Leg Platform options. The conceptual review is expected to take a minimum of three months to carry out.

BP’s partners in Mad Dog are BHP Billiton and Chevron, both of whom have been keen to keep a lid on the rising forecast development costs for the field, which would have been BP’s largest greenfield project in the US Gulf for a decade and one of the world’s largest ever Spars. The ‘Big Dog’ spar plan had a production capacity of 130,000 b/d of oil, 75 MMcf/d of total compression, and a water injection capacity of 280,000 b/d for waterflood of the western and southern field segments. The water injection capacity was also designed to be expandable to 350,000 b/d to accommodate future injection requirements.

The infrastructure for the stalled plan also included 33 wells – 19 producer wells and 14 injection wells.

BP operates Mad Dog Phase 2 with a 60.5% stake, with BHP holding 23.9% and Chevron 15.6%.

A Final Investment Decision on Phase 2, entailing expected total expenditure of more than US $10 Bn, had been expected before the end of this year but may well now not occur until the end of 2014. Construction of the spar at Technip’s Pori facility had been expected to kick off by the end of this year.

Mad Dog lies in Green Canyon Block 782 in water depths ranging from 1,372-2,073 m (4,500-6,800 ft). Recoverable reserves are put at up to 450 MM boe, although this is believed to be considerably conservative. First oil, originally pencilled in for 2018, is now likely to be shifted back to closer to 2020.

FMC Technologies chief executive John Gremp confirmed in his company’s latest financial results presentation that BP had asked the company to suspend work on the subsea tree, manifold and jumper order it had won for the Mad Dog Phase 2 project.

Mad Dog Phase 1 was developed by a smaller 100,000 b/d oil, 60 MMcf/d gas spar facility, with the Phase 2 Spar essentially upsizing the concept. However, with the addition of technologies including BP’s proprietary LosalTM water treatment process to help improve the recovery rate, the original 40,000 tonne topsides requirements and weight were being significantly impacted in terms of both size and complexity, adding to the increase in forecast costs.

The FEED work on Mad Dog Phase 2 has been carried out by Amec (topsides), Technip (the Spar) and FMC for the subsea infrastructure.

Offshore