The start-up of the first ultra-high pressure deepwater development in the US Gulf of Mexico paves the way for millions of barrels of previously hard-to-reach resources to be tapped in the offshore basin.
First oil from Chevron's $5.7bn, 75,000 b/d Anchor project — designed to withstand pressures of up to 20,000 lb/inch² (1,400 kg/cm²) with reservoir depths reaching 34,000ft (10,400m) below sea level — opens up a new frontier in deepwater production. Not only will it increase output from a region where production has plateaued since peaking at 2mn b/d in 2019, but the expertise gleaned could also be deployed in prospects from Namibia to Brazil.
The first-of-its-kind drilling technology, capable of handling pressures a third greater than normal up until now, will be closely watched by Chevron's rivals, including BP and Shell, which have similar projects. The US major is counting on growth from the Gulf of Mexico — along with the US Permian basin of west Texas and southeast New Mexico, and Kazakhstan — to shore up its production profile, especially with its $53bn acquisition of US independent Hess on hold because of a legal dispute. Chevron plans to boost its output from the Gulf of Mexico, which accounts for around 15pc of overall US production, by 50pc to 300,000 b/d by 2026.
The production milestone is no mean feat, given the complexities and risks associated with drilling under extreme sub-sea pressures. The Deepwater Horizon rig accident in 2010, which claimed the lives of 11 workers, is still uppermost in the minds of industry executives. It is "way more technically challenging when it comes to high-pressure, high-temperature" deepwater drilling, consultancy Rystad Energy partner Aditya Ravi says. "You want to do it in the safest way possible."
Chevron chief executive Mike Wirth recently spoke of the challenges of securing the necessary equipment for the Anchor development: "You've got a lot of technology qualification to satisfy our own standards, and to satisfy the regulator that every element of your kit is proven at pressures well beyond anything it will see in service. This goes from components large to small."
Anchor, which Chevron operates with a 62.86pc stake alongside TotalEnergies with 37.14pc, breaks even at $48/bl, according to estimates from consultancy Enverus. The ultra-high pressure lower tertiary play "will lead" oil expansion in the Gulf of Mexico, Enverus says, with similar hubs under construction led by BP, Shell and US independent Beacon Offshore Energy.
This is Sparta, Kaskida, and Shenandoah!
BP recently approved the Kaskida project, its sixth hub in the Gulf of Mexico, which will have capacity of 80,000 b/d from six wells in the first phase when production starts up in 2029. Advances in drilling technology, as well as updated seismic imaging, are helping to develop Kaskida and advance other projects such as Tiber, where a final investment decision is expected next year. Shell has already given the go-ahead for Sparta, where first production is expected in 2028 with capacity peaking at 90,000 b/d of oil equivalent (boe/d). Beacon Offshore has scheduled the start-up of Shenandoah for the second quarter of 2025.
The so-called "20k" high-pressure technology could potentially unlock more than 2bn boe of resources in the US Gulf of Mexico, consultancy Wood Mackenzie says. Operators expect individual wells to recover at least 30mn boe, which could extend the operating life of the basin. Chevron, one of the largest leaseholders in the deepwater Gulf of Mexico, has three projects due to come on line in the area after Anchor. "However, if results fall short, it could mark the beginning of a production decline in the basin and a blow to a resurgence in exploration for additional barrels in the play," Wood Mackenzie principal analyst Mfon Usoro says.
