Lloyds List: Thunder Horse and Atlantis hit by delays

EXTRACT: BP is a partner in several Shell-operated future projects in the Gulf of Mexico, including Ursa phase II, Mars South, Dorado and Great White.

THE ARTICLE

Published: Aug 01, 2006

BP’s GULF of Mexico projects hold one of the keys to the company’s growth in production but two important projects are facing delays and cost overruns.

In the first quarter of next year, BP expects both Thunder Horse and Atlantis platforms to come on line, way behind their schedules and beyond their original budgets.

Thunder Horse has been delayed by damage caused by hurricanes in 2005 and failures on two subsea manifolds, which need to be repaired this quarter.

‘During a routine hydrotest we experienced two leaks in subsea manifolds. We are fully investigating the events before starting up the platform,’ said chief executive John Browne.

‘Our current plan anticipates replacing just the damaged subsea equipment and this would enable, subject to weather conditions, a start-up of production in early 2007.’

BP’s head of exploration and production Tony Hayward said the manifolds were raised last week for repairs and will be reinstalled in the fourth quarter.

Project costs on Thunder Horse have grown with repair costs for the platform, which almost fell to the seabed a year ago, rising beyond $250m.

Work on Atlantis has also slowed as Gulf of Mexico loop currents have delayed the platform’s installation and higher contractor prices meant the budget is out of date, said Mr Hayward.

BP’s partner in the project, BHP Billiton, said: ‘Cost pressures are likely to result in a capital cost increase of more than 30% in excess of the current approved budget of $1.1bn.

‘Overall project progress is approximately 80% and the project schedule remains under review.’

Atlantis has a nameplate production capacity of 200,000 barrels of oil and 180m cu ft of gas per day, which gives it capacity for satellite projects.

It is thought Thunder Horse will come on line first in January 2007, followed swiftly by Atlantis before the end of the first quarter.

Also next year, BP plans to increase production from the King field by installing the first subsea multiphase pumps in the region’s deepwaters.

In the medium term, BP is considering developing the Mad Dog SW ridge, Horn Mountain NW area and the Atlantis North flank via its existing floating production platforms. It also has its sights on developing the Puma and Tubular Bells oil discoveries.

BP is a partner in several Shell-operated future projects in the Gulf of Mexico, including Ursa phase II, Mars South, Dorado and Great White.

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