Mad Dog

Puts paid to the claims that all the oil majors are moving onshore from offshore and that a 15% share of a project is not substantial. Interesting that BP has sanctioned the project ahead of BHP and Chevron's formal approval.

When the big boys move they move and no number of shareholder updates or requests for information from shareholders will impact the process. If it is worth doing it will be done. AIMO.

Oil giant BP has officially sanctioned the $US9 billion ($12 billion) Mad Dog 2 oil project in the Gulf of Mexico, which includes BHP Billiton as a major shareholder.
The project will include a new floating oil platform with the capacity to produce as much as 140,000 gross barrels of crude oil per day. Production is expected to begin in late 2021.
BP is the operator of the project with a 60.5 per cent stake, and it indicated that BHP and Chevron would make their investment decisions at a later time.
"While BP has reached a final investment decision on Mad Dog Phase 2, BHP Billiton and Chevron, for the Union Oil Company of California interest, are expected to make a final investment decision in the future," said BP in a statement.
BHP owns 23.9 per cent of the project and Chevron 15.6 per cent.
BHP is expected to approve the spending as one way of offsetting its declining production of conventional oil over the next decade.
But even with Mad Dog, BHP's production of conventional oil is expected to decline over the next decade, unless significant new volumes can be found through exploration or acquisitions.
The $US9 billion price tag demonstrates how the project partners have made good on their recent promises to deliver a sharply reduced price tag on the expansion.
The project was originally expected to be approved in 2013 at a cost approaching $US20 billion, but the partners deferred it in a bid to find a cheaper development model.
The slump in the oil price, which really took effect in the second half of 2014, also saw the project delayed.
But with contracting costs now much lower after more than two years of frugality in the oil and gas sector the partners believe the project will be viable when oil prices are around $US40 per barrel.
"This announcement shows that big deepwater projects can still be economic in a low price environment in the US if they are designed in a smart and cost-effective way," said BP chief executive Bob Dudley.
BHP's share of the construction cost is expected to be between $US2 billion and $US2.5 billion.
BP's announcement came barely one day after major oil producing nations signalled they would curb output in a bid to strengthen prices.
Brent crude was 4.5 per cent higher on Friday morning at $US54.18 a barrel.