By Andrew Kelly | Energy Intelligence | The US Gulf of Mexico holds a prominent place in the global upstream portfolios of its three biggest producers, Shell, BP and Chevron, all delivering a steady stream of high-margin crude oil. All three majors are working to prolong the life and maximize the output of their legacy assets in the US Gulf while continuing exploration work that still leads to some material discoveries. Below, we review their recent and planned exploration in the US Gulf and examine some of the region’s other top producers. Chevron’s acquisition of Hess has enhanced its US Gulf of Mexico output and lease portfolio.
Chevron has been riding high lately after prevailing in its arbitration case with Exxon Mobil and sealing the acquisition of Hess. The merger will lift Chevron’s production in the US Gulf by some 40,000 barrels of oil equivalent per day and will also make it the largest holder of leased blocks in the region, according to CEO Mike Wirth. In April of this year, Chevron started up the Ballymore field, the last of three developments that were expected to increase its net production in the US Gulf to 300,000 boe/d by 2026, excluding any contribution from Hess.
Chevron strategy chief Mark Nelson noted on the company’s second-quarter earnings call that 80% of the expanded portfolio of US Gulf leases lies within the tie-back range of existing infrastructure, which allows smaller discoveries to be developed at relatively low cost. For example, Ballymore was tied back to the company’s existing Blind Faith platform. Chevron also achieved an important milestone in the US Gulf last year with the start-up of its Anchor field, the first in the world to make use of “20k” technology that allows the industry to work safely at deepwater pressures of up to 20,000 pounds per square inch.
BP expects its Kaskida and Tiber projects will turbocharge its US offshore output.
BP will also use 20k technology at the Kaskida field as it pursues its goal of 400,000 boe/d of production capacity in the US Gulf by 2030. The UK major will target 275 million barrels of oil equivalent of resources in the initial phase of development at Kaskida, with first oil expected in 2029. The company says it has identified a combined 10 billion boe of in-place resources in a wider area around Kaskida and the nearby Tiber discovery, on which it expects to take FID later this year.
CEO Murray Auchincloss says it is difficult to overstate the importance of BP’s US Gulf operations and its BPX US onshore business. “Thirty-to-forty percent of our profitability and cash flow comes from the United States,” he said on the company’s second-quarter earnings call. “We invest 40%-50% of our capital there as well. So it is a massive business for us.” Even as BP focuses on turning Kaskida into its sixth US Gulf production hub, it continues to develop additional resources close to legacy fields and infrastructure, such as the Mad Dog Southwest extension project — a three-well tie-back to its Argos platform that was brought onstream in early August, seven months ahead of schedule.
Top US Gulf producer Shell is not resting on its laurels with the start-up of Sparta due in 2028.
Fellow UK major Shell has long been the top producer in the US Gulf, but BP and Chevron are closing in. In January of this year, Shell brought its Whale field on line, where it is targeting 480 million boe of proved and probable reserves. Speaking on the company’s second-quarter earnings call, CEO Wael Sawan said Whale had ramped up to its full output of 100,000 boe/d within just five months.
The UK major’s next big project in the region, the 90,000 boe/d Sparta field, is scheduled to start production in 2028. Like its peers, Shell is looking to work its existing assets hard to extract full value from them. The company took FID last year on a waterflood project that aims to recover an additional 60 million boe from its Vito field in the US Gulf. Shell is also a 22.5% stakeholder in what looks to be a large discovery dubbed Daenerys that was announced by US independent Talos Energy earlier in August. An appraisal well is planned for the second quarter of 2026.
US GULF OF MEXICO: SELECT BP, CHEVRON AND SHELL PROJECTS
Occidental Petroleum’s output in the region has dipped recently, but it has acquired additional leases.
Oxy entered the Gulf by acquiring Anadarko Petroleum in 2019. The US independent’s US Gulf output has slipped after reaching an annual peak of 147,000 boe/d in 2022, but the company was one of the top bidders at the last lease sale in December 2023, when it secured 49 blocks, a number surpassed only by Shell.
US Gulf operators have welcomed the Trump administration’s plans for a return to more frequent lease sales after a slowdown during the Biden administration. Meanwhile, the US Energy Information Administration has forecast that modest output increases this year and next could lift the offshore region’s annual average crude production close to the 1.9 million barrel per day record set in 2019.
Last lease sale held – December 2023
Equinor, Woodside Energy and TotalEnergies hold big nonoperated positions in the offshore province.
Equinor has edged ahead of Oxy into fourth place among US Gulf producers at 129,000 boe/d net output in the second quarter. But the state-led company’s production in the region remains well behind the top three producers. Equinor is one of several non-US companies with sizeable US Gulf output, derived largely or entirely from nonoperated interests. “This is a proven and prolific basin where we can produce high-value barrels with globally competitive carbon efficiency,” Chris Golden, the company’s US country manager, told Energy Intelligence recently. With its 49% stake in the Shell-operated Sparta project, Equinor expects its US Gulf portfolio to be “an important cash flow contributor into the 2030s,” he added.
Australia’s Woodside, which entered the US Gulf in 2022 with the acquisition of BHP’s oil and gas business, gets most of its production in the region from nonoperated stakes in BP’s Mad Dog and Atlantis. Woodside operates the legacy Shenzi field and brought the Shenzi North project on line in the second half of 2023, but a disappointing early production performance led to a reduction in estimated reserves and a related $1.2 billion impairment charge. Nonetheless, Woodside CEO Meg O’Neill said earlier this year that the US Gulf will remain “a very important part of our portfolio” well into the next decade.
Total’s net share of production in the US Gulf amounted to around 25,000 boe/d last year. In June of this year, the French major doubled down on its partnership with Chevron in the offshore region, acquiring a 25% stake in 40 blocks operated by the US major. Total said in April that its 40% stake in the Chevron-led Ballymore project would add almost 30,000 boe/d to its net Gulf production at plateau. At the time, upstream head Nicolas Terraz touted Total’s “low breakeven and low-emissions oil and gas projects” in the US, which also include nonoperated interests in the onshore Barnett and Eagle Ford Shale plays.
Editor’s Note: This article has been updated to reflect BP’s correction of remarks made by its CEO about the profitability, cash flow and capital spending of its US business.
