Chevron has sanctioned the go-ahead for $7.5billion Jack/St Malo, one of the most important developments yet attempted in the US Gulf of Mexico.
The neighbouring fields are estimated to contain combined recoverable reserves in excess of 500million barrels oil equivalent.
Jack/St Malo is located in the Lower Tertiary trend in the deepwater US Gulf of Mexico and, despite initial doubts among some pundits, the project is now seen as opening the door to a major new play.
Seven exploration and appraisal wells have been successfully and safely drilled at these fields since 2003. They include a record-setting well test in 2006, the borehold for which was drilled to a total depth of 8,587m (28,175ft).
Further development wells remain to be drilled into the Lower Tertiary reservoirs, which lie at a nominal depth of some 8,077m (26,500ft).
Announcing the final go-ahead, George Kirkland, the company’s vice-chairman, said: “Jack/St Malo is the latest example of Chevron advancing its industry-leading queue of major capital projects.
“The Lower Tertiary is recognised as a huge resource with the potential for long-life projects of up to 30 to 40 years and the opportunity to enhance recoveries through technology.”
Chevron sees this development as another step in its efforts to exploit the Lower Tertiary trend. The super-major already has an operating interest in the 2009 Buckskin discovery and is a participant in the Perdido Regional Development, which the company says is providing “significant learnings” that can be applied to Jack/St Malo.”
The Jack and St Malo fields are located within 40km (25 miles) of each other on Walker Ridge blocks 678 and 758, about 280 miles south of New Orleans, Louisiana, in water depths of 2,100m (7,000ft).
The initial development will require an investment of around $7.5billion. It will comprise three subsea centres tied back to a hub production facility with a capacity of 170,000 barrels and 42.5million cu.ft of gas per day.
First commercial output is anticipated in 2014.
Little news on the main contract packages for this project has emerged so far. However, in September, Chevron said that Houston-based Mustang, a unit of Aberdeen-headquartered Wood Group, had been selected to carry out the detail design work on the topsides of the semi-submersible floater.
Mustang will also provide detailed engineering for the integrated control and safety systems.
There had been speculation earlier in the year that bidding for the unit’s hull had come down to a dual between two Asian yards.
Chevron is the operator of Walker Ridge blocks 678 and 758, with working interests of 50% in the Jack field, 51% in the St Malo field, and 50.67% in the host facility. Statoil holds a 25% interest in Jack and 21.5% in St Malo. Apache holds the remaining interest in each.
Chevron is one of the leading leaseholders in the deepwater Gulf of Mexico, averaging net daily production of 97,000 barrels of oil, 56million cu.ft of gas and 6,000 barrels of natural gas liquids during 2009.
Last year (2009), the company reached peak production rates on two significant new deepwater developments –Blind Faith and Tahiti.
Chevron has a 75% interest in and operates Blind Faith, which ranks as the company’s deepest offshore facility, located in 1,981m (6,500ft) of water.
The company has 58% of Tahiti, which lies in some 1,250m (4,100ft) of water.