By Jennifer Larino, NOLA.com | The Times-Picayune
on February 25, 2014 at 4:31 PM, updated February 25, 2014 at 4:32 PM
BP has started production at a key offshore oil and gas hub, its third major deepwater drilling project to begin flowing oil and gas in the Gulf of Mexico this year, the company said this week.
The project falls in line with the oil giant’s broader strategy to ramp up high-margin oil and gas production at four of its platforms in the region.
The recent activity centers on BP’s Na Kika field and production platform located about 140 miles southeast of New Orleans, in which BP owns a 50 percent interest. Royal Dutch Shell owns the remaining stake.
This is the third and latest phase of development at the Na Kika field, which started producing oil in 2003. The Na Kika platform sits in more than 6,000 feet of water.
BP has grown its operations there in recent months, drilling two new wells and building a system of subsea pipe and other equipment needed to tie the new wells back to the Na Kika platform.
BP brought the first oil well under the latest development phase into production on Feb. 19. A second well is expected to start up in the second quarter.
The company is also installing new equipment to boost production at an existing well at the site.
The investment could boost Na Kika’s daily production from up to 130,000 barrels of oil equivalent to up to 170,000 barrels.
The Na Kika project is among a number of projects expected to come online in the Gulf in coming years, potentially pushing the area to record high oil production by 2016.
BP has started up two other major deepwater projects so far this year, its Chirag oil project in the Caspian Sea and the Mars B project also in the Gulf of Mexico.
Shell, which operates Mars B, started production at the field’s Olympus platform, a move that is expected to boost production by 100,000 barrels per day, according to a report by FuelFix this month. BP owns a 28.5 percent working interest in the project.
BP plans to invest about $4 billion annually in the Gulf over the next decade, with much of the spending centering on four of the platforms it operates in the area – Thunder Horse, Na Kika, Atlantis and Mad Dog.
New leasing could also factor into the company’s spending plans.
BP America Inc. CEO John Minge, in a speech to the Louisiana Mid-Continent Oil and Gas Association in New Orleans on Feb. 19, said that the company was nearing an agreement with the U.S. Environmental Protection Agency and Department of Justice that would again allow the company to bid on federal contracts, according to The Associated Press.
The suspension was put in place in November 2012 after BP pleaded guilty to criminal counts tied to the 2010 Deepwater Horizon rig explosion, which killed 11 men and unleashed the worst offshore oil spill in U.S. history.
It’s still unclear whether the parties will reach an agreement prior to federal lease sales in the central and eastern Gulf planned for March 19 in New Orleans.
Special thanks to Richard Charter