Chevron sanctions Anchor project in deepwater US Gulf of Mexico

Chevron Corp. has sanctioned the Anchor project in the US Gulf of Mexico, marking the industry’s first deepwater high-pressure development to achieve a final investment decision. At a cost of $5.7 billion, Stage 1 of Anchor development consists of a seven-well subsea development and semi-submersible floating production unit. First oil is anticipated in 2024.

Anchor field lies in the Green Canyon area, 225 km off the coast of Louisiana, in water depths of 1,524 m. The planned facility has a design capacity of 75,000 bbl of crude oil and 28 MMcfd of natural gas. The total potentially recoverable oil-equivalent resources for Anchor are estimated to exceed 440 million bbl. The discovery was successfully appraised in the Lower Tertiary Wilcox trend in October 2015 (OGJ Online, Oct. 29, 2015).

Delivery of the new technology, which is capable of handling pressures of 20,000 psi, also enables access to other high-pressure resource opportunities across the Gulf of Mexico for Chevron and the industry, the company said.

“For new projects in the Gulf of Mexico, we have reduced development costs by nearly a third, compared to our last generation of greenfield deepwater investments,” said Steve Green, president of Chevron North America Exploration and Production. “We’re doing this by standardizing equipment, utilizing fit-for-purpose surface facilities that require less capital and employing drill to fill strategies,” he said.

The project's sanction "shows that the US Gulf of Mexico still offers attractive investment opportunities for large greenfield developments," said Justin Rostant, an analyst with Wood Mackenzie's Gulf of Mexico team. "While over 80% of projects sanctioned in the last 5 years are shorter-cycle subsea tiebacks, standalone developments like Anchor are still able to compete for development capital," he said. 

The project is the first of three 20-K projects that Wood Mackenzie expects to reach FID within the next 18 months, Rostant said. "We estimate that these three projects combined hold approximately 1 billion bbl of oil equivalent in reserves and will require over $10 billion of capital investments.”

Wood Mackenzie values Anchor at $1.5 billion with a development-cycle breakeven of $51/bbl (Brent).

Chevron USA Inc. is operator with 62.86% interest. Total E&P USA Inc. holds 37.14%.