BP Starts Up Galapagos Project In US Gulf

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June 12, 2012

HOUSTON–BP PLC (BP) said Tuesday that it began the start-up process of Galapagos, one of its major oil and gas projects in the deepwater U.S. Gulf of Mexico.

The development, which ties three new deepwater fields to the already-producing Na Kika platform, will reach a peak production rate of 60,000 barrels of oil per day, the company said.

The Na Kika facility, which can handle up to 130,000 barrels per day of crude, has been modified to process the production from the three fields, one of which is operated by BP and two by Noble Energy Inc. (NBL). Start-up work began June 3, and is expected to conclude within four to six weeks, with three wells being brought online one at a time. Another well will be drilled and completed in 2013.

BP, whose overall interest in the three fields amounts to 56%, expects to receive an initial rate of 15,000 barrels of oil per day from the project in the near term, with longer-term net production of 26,000 barrels of oil per day. BP’s partners are Noble, Red Willow Production Co. and Houston Energy Inc.

Galapagos is BP’s first major project start-up in the U.S. Gulf since 2009, when it began producing oil and the Dorado and King South fields, which were also tie-backs to existing infrastructure.

The news comes as companies flock back to the U.S. Gulf after the lull that resulted from the Deepwater Horizon oil spill in 2010. The massive spill, which followed a deadly blast aboard a Transocean Ltd. (RIG) rig drilling for BP, resulted in an overhaul of deepwater drilling regulations and a moratorium on deepwater drilling. But since work resumed in the earnest starting last year, higher output from the area helped raise average U.S. oil production in the first quarter to its highest level in 14 years, topping 6 million barrels of oil a day.

One of the three initial wells in the Galapagos project, at the Santiago field, was the first one drilled after the moratorium was lifted last year. The other fields are dubbed Isabela and Santa Cruz.

Galapagos is one of six major milestone oil and gas projects BP plans to start up this year. The others are located in Angola, the North Sea and Norway.

BP said it plans to invest at least $4 billion a year on oil and gas development in the Gulf of Mexico over the next 10 years. The company, which still faces billions of dollars in fines for its part in Deepwater Horizon spill, has said it will concentrate on investing in profitable oil production from basins in the U.S., Angola and Brazil.

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