BP's Rough Third Quarter Still Shows Strong Future for Billions in Offshore, Refining Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--BP plc (NYSE:BP) (London, England) reported its first quarterly loss in more than three years and a 2.5% dip in oil and gas production, due in part to a two-week disruption to production in the Gulf of Mexico from Hurricane Barry, for third-quarter 2019. Although the energy giant cut its organic capital expenditures for the full year to less than $16 billion, on the lower end of the previously predicted $15 billion to $17 billion, it remains optimistic about its overall outlook. Industrial Info is tracking $31 billion in active global projects from BP, including more than $8 billion in the U.S. alone.

Click on the image at right for a graph detailing BP's active global projects, by industry sector.

In the Gulf of Mexico, BP is at work on several projects that are nearing or under construction, notably its Mad Dog 2 offshore drilling project in Block 782. In August, BP awarded WorleyParsons (North Sydney, Australia) the hook-up and commissioning deal for the $3 billion floating production unit, which is expected to produce 140,000 barrels per day (BBL/d) of oil. BP also is constructing and installing $1.5 billion in subsea infrastructure in the same block, including 53 miles of umbilicals and 23 miles of flowlines.

Mad Dog 2 will accommodate an estimated $232 million worth of drilling programs from 2020 through 2022, resulting in five new wells. Each program is expected to be completed, and see production begin, in the first quarter of the following year. For more information, see Industrial Info's project reports on the production unit and subsea infrastructure, and the 2020, 2021 and 2022 drilling programs.

Earlier this year, BP approved an expansion to its Thunder Horse offshore platform in the Gulf of Mexico that will add 50,000 oil-equivalent BBL/d of production to the massive Thunder Horse field. BP recently determined that the field holds up to 1 billion barrels of previously unknown potential, which it plans to exploit through an additional $125 million in water-injection and production wells and $125 million in subsea infrastructure, which are expected to be completed from third-quarter 2020 through first-quarter 2021. For more information, see Industrial Info's project reports on the wells and infrastructure.

The oil and gas giant saw some positive results this quarter in its refining business. BP's Cherry Point Refinery in Blaine, Washington, reported record quarterly throughput for the third quarter, and BP is considering two proposals to further improve reliability: an estimated $150 million coke drum replacement on the delayed coker, and an estimated $20 million in upgrades to the crude and vacuum unit, which have capacities of 260,000 and 90,000 BBL/d, respectively. For more information, see Industrial Info's reports on the proposed coke drum and crude/vacuum projects.

The company's refinery in Whiting, Indiana, also reported record throughput in the third quarter, and is preparing to undergo an estimated $45 million upgrade for its fluid catalytic cracker unit next year. The unit, an FCCU 500 model, processes 110,000 BBL/d. For more information, see Industrial Info's project report.

Brian Gilvary, the chief financial officer of BP, said during a recent earnings-related conference call that the company continues to explore "new energy frontiers... where we really need to accelerate pace and grow out some of that portfolio." This alludes to the growth of renewable energy, to which BP, like other global oil and gas majors, is struggling to adapt. Gilravy said his company's "new energy" assets likely would not be "simply renewable, it may be renewable-integrated," such as mixing wind or solar-generated energy with natural gas turbines.

BP's renewable-energy portfolio includes a $260 million repowering of the Sherbino Windfarm in Fort Stockton, Texas, which involves replacing 60 existing turbines with 68 higher-efficiency models, likely from Vestas (Aarhus, Denmark). For more information, see Industrial Info's project report.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.