Since its discovery in 1998, the Mad Dog team has found ways to peer through dense salt cathedrals, seen estimated oil reserves grow to 5 Bbbl of oil, and made a crucial find: how to make it profitable.

The journey to become a massive world-class oil field required confronting setbacks with geology. The Mad Dog spar endured hurricanes. And its owners had to find ways to avoid scuttling a project that was simply too expensive.

Technology, exploration, geology and cooperation are at the heart of Mad Dog’s success and for the planned Mad Dog 2 project. But it was only after serious review and analysis that three of the largest oil companies saw the wisdom in teaming up.

Underlying the eventual success was a commitment by the owners of the discovery to share their findings and results—in other words, their secrets. The project is led by operator BP, which owns a 60.5% stake in the project, BHP Billiton (23.9%, owner) and Chevron Corp. (15.6%).

By the time Mad Dog 2 began planning, it was clear it would be far too expensive.

This led to three important changes, panelists said at a Monday morning technical session at OTC on the multidisciplinary techniques used to unlock deepwater development.

Chief among these were following a focus on recovering value, not volume; implementing industry-led solutions; and fostering open co-owner collaboration.

“Instead of going after every barrel, we focused on value,” said Bill Steel, BP project general manager for Mad Dog Phase 2. “This translated into capturing the key resources with a smaller facility. The theme at the time was 90% of the resource for 60% of the cost.”

The development strategy was called transformer, and it relied on adaptability.

“Rather than designing for a future that may not happen, the principle was to design for something reasonable for day one needs with capacity for expansion if we needed it,” Steel said.

Gulf of Mexico (GoM) oil exploration can be blisteringly expensive. After the discovery of the Mars Field off the coast of Louisiana, the oil industry saw an opportunity to turn the GoM into a bountiful oilfield.

“Industry went after this play and we got it dead wrong,” said Cindy Yeilding senior vice president of BP America.

At one point, seven spectacularly expensive dry holes in a row had transformed the GoM from a promising reservoir into “the Dead Sea,” Yeilding said.

But BP decided to give it another go, this time going back to the basic principles of oil geophysics and geology.

Yielding said the company went back to first principles of geology—namely that petroleum migrates to anticlines.

“Our big shift was to look for structures,” she said.

The challenge was the irregular topography, which is complicated by many layers of salt canopy. But while salt had previously been avoided, “salt now is clearly our friend.”

Salt is tough to take images through, but with advances in technology, petroleum systems began to emerge.

BP had been looking for an “elephant that would stand alone.” The find would need to be big enough that it held the oil needed to require a commitment of resources and talent, Yeilding said.

Mad Dog, discovered in 1998, was thought to hold 800,000 bbl of oil. Mad Dog produced first oil in 2005. The resourced estimate grew with a field appraisal to 1.5 Bbbl of oil. By 2007 the oil estimate increased yet again. Mad Dog was sitting atop a potential 2 Bbbl of oil.

Further exploration of the south side discovered even more oil, bringing the resource estimate to 4 Bbbl.

The Mad Dog spar was capable of producing 80,000 bbl/d, and clearly that “wasn’t going to do the trick,” said Doris Reiter, vice president of performance management for BP.

As planning progressed, it culminated in a project called Big Dog.

“It was a monster of a spar. Thirty-three wells and a price tag to match,” Reiter said.

She said it was clear $20 billion was far too expensive.

Engineers and ownership alike came to the conclusion that the remainder of the resource would need to be developed with more focused and clearer objectives.

In essence, the plan became “Let’s get 90% of the resource estimates—for 60% of the cost,” Reiter said.

Steel said the new plan balanced exposure to the downside but had flexibility through an adaptable facility and subsea well system. Owners chose equipment they had the most experience with.

With the oil resource now believed to be 5 Bbbl, BP is close to putting its plans to work.

“We now forecast 120% of the original reserve estimate at less than 50% of the cost,” Steel said.

Offshore