BP takes FID on Kaskida oil project in US Gulf of Mexico

BP has reached a final investment decision on the Kaskida oil project in the US Gulf of Mexico, paving the way for a new production hub in 2029 to unlock the potential development of up to 10 billion barrels of discovered resources, the company said July 30.

The 4 billion-barrel Kaskida oil project, located in the Keathley Canyon area about 250 miles southwest off the coast of New Orleans, includes a new floating production platform with capacity to produce 80,000 b/d from six wells in the first phase.

As BP's sixth hub in the Gulf of Mexico, Kaskida also opens the potential development of 10 billion barrels of resources across the Kaskida and Tiber catchment areas.

That volume of discovered resources in a basin that's been "highly developed" by other companies means it's "time for [BP] to catch up with that, Murray Auchincloss, BP's CEO, said during the company's second-quarter earnings conference call.

Auchincloss said BP has "used an industry-standard solution for Kaskida," whose first phase will cost less than $5 billion to deliver "at least 275 million barrels" of resource.

The long-awaited greenlighting of Kaskida, first discovered in 2006 in nearly 6,000 feet of water, is expected to be followed in mid-2025 by sanctioning of the nearby Tiber field, also a BP discovery made in 2009, Auchincloss said.

"[Tiber] will pretty much be a photocopy of Kaskida as well for capital productivity," he said. "And at the same time we're doing that, we'll be appraising the West bump at Kaskida. And hopefully, that will just tie back and flow into East Kaskida over time."

"We've got a couple of exploration wells to the East and West Kaskida and some more stuff near Guadalupe and Tiber as well," he added, referring to still another older BP discovery, Guadalupe, made in 2014. "So it's a very, very, very strong resource base. We've got some derisking to do with appraisal wells and exploration wells that are very sensible to do given the high-quality seismic that we've shot."

Auchincloss said BP has 1,000 feet of pay at Kaskida, whereas the average across the rest of the Paleogene is around 500 feet of pay.

"So it's an enormous, enormous column of oil," he said. "We'll be doing a seven-frac [hydraulic fracture] completion inside those. So let's see if we get 275 million boe or something much higher over time."

Additional wells could be drilled in future phases, subject to further evaluation, he added.

Kaskida's development follows BP's startup of Mad Dog Phase 2 in the Gulf of Mexico, even as the UK major continues to pay out compensation for the Macondo 2010 Gulf of Mexico spill.

Confidence in Kaskida reflects technological progress since the discovery, including the ability to drill and hydraulically fracture in high-pressure Paleogene reservoirs.

"Developing Kaskida will unlock the potential of the Paleogene in the Gulf of Mexico for BP, building on our decades of experience in the region," BP's upstream head Gordon Birrell said in a statement.

"Technology has and will continue to play a pivotal role in propelling Kaskida from discovery to production," Birrell said. "Together with the other resources we have in the Paleogene, we expect it to prove to be a world-class development."

In the past few years, the industry has moved ahead with the development of Paleogene discoveries in the US Gulf made a decade or more ago. Chevron is putting the finishing touches on the construction of its Anchor field, discovered in 2014 and slated to come online later in 2024. Also, Beacon Offshore is developing the Shenandoah discovery made in 2009 and eyed for 2025.

These high-pressure, high-temperature fields carry 20,000 pounds of pressure per square inch versus the 15,000 psi typical of US Gulf deepwater fields, and have only been able to be produced using the recently developed technology.

Kaskida is owned 100% by BP, though Auchincloss did say he wasn't sure if the company will keep total ownership or farm part of it out to a partner.

"It will be an interesting choice to ask me 12 or 18 months away," he said.

BP produced around 300,000 b/d of oil equivalent from the Gulf of Mexico in 2023.