3 Major Gulf of Mexico Oil Projects to Watch This Year

A closer look at three important Gulf of Mexico projects slated to begin producing oil this year.

Feb 9, 2014 at 12:00PM

In the aftermath of the 2010 BP (NYSE:BP) Deepwater Horizon disaster and the subsequent moratorium on Gulf of Mexico drilling, deepwater drilling activity in the region plunged. But over the past year or so, Gulf drilling activity has come roaring back, with the number of drilling permits issued in the region surging to a record 807 in September of last year.

With a handful of major oil companies set to start up new projects in the Gulf this year, production is set to surge by 15% to about 1.5 million barrels of oil a day, according to energy consultancy Wood Mackenzie. Let's take a closer look at three major projects set to start up this year and their impact on the companies involved.

Chevron's Jack/St. Malo
First up is Chevron's (NYSE:CVX) Jack/St. Malo project, which involves the development of the Jack and St. Malo fields using a host floating production unit located between the two fields in water depths of 7,000 feet. The project is slated to come online this year, with a maximum capacity of 177,000 barrels of oil-equivalent per day, or BOE/d, of which 88,500 BOE/d will be net to Chevron.

Chevron maintains a 51% working interest in the St. Malo field, along with partner Petrobras (NYSE:PBR), which has a 25% stake, Statoil, which holds a 21.5% interest, and ExxonMobil and Eni, which each hold a 1.25% interest. It also maintains a 50% interest in the Jack field, along with partners Maersrk and Statoil, which each hold a 25% stake in the field.

Chevron is planning a huge ramp-up in its Gulf of Mexico production over the next few years. In addition to Jack/St. Malo, the company is also getting ready to bring online two other major Gulf projects this year -- Big Foot and Tubular Bells. Combined, these projects will contribute more than 150,000 BOE/d of net production when operating at full capacity, more than doubling Chevron's 2012 deepwater Gulf of Mexico production level of 125,000 BOE/d.

Hess' Tubular Bells
Next up is Hess' (NYSE:HES) Tubular Bells project, which involves the development of the Tubular Bells deepwater oil and gas field using a subsea wet tree infrastructure tied back to a three-level topside structure and supported by a design spar. The $3 billion project -- operated by Hess with a 57.14% working interest, and Chevron, which holds the remaining 42.86% interest -- is slated to come online in the third quarter of this year.

It will have a peak production capacity of 40,000-45,000 BOE/d, with production net to Hess expected to be 25,000 BOE/d this year. Citing recent encouraging drilling results, Hess reckons that there could be additional upside from Tubular Bells in terms of production and reserves. In addition to its assets in North Dakota's Bakken shale and Norway's Valhall field, Tubular Bells will be one of the main contributors to the company's near-term production growth.

Anadarko's Lucius
A third major project coming online this year is Anadarko's (NYSE:APC) Lucius project, which involves the development of the Lucius oil field. In its fourth-quarter earnings release, Anadarko said it has completed the installation of the 80,000-barrels-of-oil-per-day Lucius truss spar -- a massive 23,000-ton floating production facility -- that will be used to extract oil from the field.

Production from Lucius is expected to commence on time and on budget in the second quarter of this year. Other owners of the project include Plains Exploration & Production, which has a 23.3% stake; ExxonMobil, with a 15% stake; Apache, with an 11.7% interest; Petrobras, with 9.6%; and Eni, with 5.4%.

The project's start-up will help cement Anadarko's exceptional footprint in the Gulf. In addition to its Caesar/Tonga project, which achieved first oil in 2012, and Lucius, Anadarko expects to begin producing oil from the Heidelberg field, which is also being developed using an 80,000 BOE/d truss spar, in 2016. Along with its North American onshore assets in Texas and Colorado and megaprojects including El Merk in Algeria's Sahara Desert and the Jubilee oilfield offshore Ghana, these projects should drive 5%-7% annual production growth for Anadarko through 2020.

The bottom line
As you can see, 2014 will be an exciting year for Gulf of Mexico energy producers. In my view, Chevron is arguably the best-positioned oil major in the region, though Royal Dutch Shell and BP aren't far behind, while Anadarko is a clear standout among the midmajors given its robust portfolio of projects and its peer-leading exploration success. Investors should keep an eye out for any potential delays in these projects' start-up dates, since they could have a material impact on companies' earnings and cash flows.

Get ready for the next energy boom
Though Chevron, Hess, and Anadarko are zeroing in on deepwater projects, other companies are seeing tremendous success in onshore US oil and gas plays. That's why The Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Chevron, Petrobras, and Statoil. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information