Anadarko Petroleum Gears Up for $4.5 Billion in 2018 Capital Spending

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Researched by Industrial Info Resources (Sugar Land, Texas)--Anadarko Petroleum Corporation (NYSE:APC) (The Woodlands, Texas) is planning capital investments of between $4.1 billion to $4.5 billion in 2018, about 85% of which is attached to U.S. projects, both onshore and offshore. Industrial Info is tracking $4.4 billion in active projects involving Anadarko, the bulk of which is attributed to a deepwater drilling project in the Gulf of Mexico, where the company plans to spend more than $1 billion this year.

Anadarko is among the most active producers in the U.S. Gulf of Mexico. But one of its biggest projects in the area has been at a standstill for almost a year: The proposed, $4 billion Shenandoah Offshore Platform, which is designed for more than 80,000 barrels per day (BBL/d) of crude oil from the Shenandoah Field. Anadarko is working toward a joint development agreement for the semi-submersible system with companies such as BP plc (NYSE:BP) (London, England), Chevron Corporation (NYSE:CVX), ConocoPhillips (NYSE:COP) (Houston, Texas) and Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands), but it hit a snag when test wells yielded disappointing results. For more information, see Industrial Info's project report.

Despite this setback, Michael Ingram, the executive vice president of international and deepwater operations for Anadarko, recently said that the company's operational projects and numerous tieback opportunities in the Gulf can help Anadarko deliver returns that rival onshore unconventional development, which many other producers have favored due to the rising expenses and risks involved in offshore development.

Among the proposed tieback projects is the $80 million development in the Buckskin Field, which is expected to run six miles from the field to Anadarko's Lucius Platform. It is expected to begin construction early next year. For more information, see Industrial Info's project report.

Anadarko plans to operate two floating drillships and spud up to five wells in the Gulf in 2018. Last year, the company began development activities in the Gulf's Horn Mountain area, which it picked up as part of its acquisition of Freeport-McMoRan Incorporated's (NYSE:FCX) (Phoenix, Arizona) related interests in 2016, and already is producing 25,000 BBL/d. It is at work on $15 million in additions at Horn Mountain, including well jumpers and gas-lift mechanisms. For more information, see Industrial Info's project report.

"As with the U.S. onshore assets, Anadarko is uniquely positioned in the deepwater Gulf of Mexico with an industry-leading 10 operated floating facilities, associated infrastructure, and extensive acreage position of more than 300 blocks," Ingram said in a recent earnings-related conference call. "No other company can match our deepwater infrastructure position in the Gulf."

Anadarko's 2017 onshore production was boosted by exit rates of more than 150,000 BBL/d combined from the Delaware and Denver-Julesburg basins. Delaware Basin Midstream, a subsidiary of Anadarko, is building the $50 million Paduca Breaks Central natural gas-treating plant near Jal, New Mexico, which would process 50 million standard cubic feet per day from the Delaware Basin. The project began construction in August and is expected to be completed this summer. For more information, see Industrial Info's project report.

Outside the U.S., Algeria has provided Anadarko with the strongest sales volumes of any country. An executive noted in the earnings-related call that Algeria "requires minimal capital investment to optimize resource development and maintain the oil plateau of more than 55,000 barrels of oil per day." Anadarko's local subsidiary is at work on a $50 million oil-drilling program in the Ourhoud Field, which includes workover and re-completion drilling on seven or eight wells to maintain production. For more information, see Industrial Info's project report.

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