BHP holds a 44-percent interest in the Atlantis field, while London-based BP possesses a 56-percent stake.
The board of directors of international mining major BHP (ASX:BHP,NYSE:BHP,LSE:BLT) has approved US$696 million to fund the development of the Atlantis Phase 3 project in the US Gulf of Mexico.
BHP holds a 44-percent interest in the Atlantis field, while London-based BP (LSE:BP,NYSE:BP) possess a 56-percent stake.
The BHP approval follows a BP announcement from January, where the company reported the discovery of additional oil prospects in the Gulf of Mexico, some of which are included in the Atlantis field.
According to BP, the project will cost US$1.3 billion, of which BHP has pledged US$696 million.
Located 130 miles off the coast of Louisiana, Atlantis Phase 3 is a subsea tie back of eight new production wells that will be drilled to access the infill resource opportunities.
The joint venture plans to utilize the existing infrastructure, production ullage and marketing agreements, with first production pegged to commence in the 2020 calendar year.
“The Atlantis Phase 3 project provides a competitive opportunity to deliver on our strategy to grow resources in tier 1 conventional deep-water assets. The project will further expand the Atlantis field and will provide cost-efficient, near-term volumes,” Steve Pastor, BHP’s president of operations petroleum, said in the announcement.
The project will be steadily ramped-up by 38,000 barrels of oil equivalent per day gross at its peak.
In addition to the multi-million dollar investment in Atlantis, the BHP board also approved US$256 million to fund the drilling of an additional appraisal well (3DEL) in the Trion field located in Mexico.
The money will also be used to further study and delineate the scale and characterization of the resource.
“A further appraisal well at Trion, following the recent encouraging results at the 2DEL appraisal well, reduces investment risk and adds value to this project. If Trion is determined to be commercial, these funds will also provide an option to potentially accelerate development of Trion,” said Pastor.
BHP is the majority stake holder and operator of Trion with a 60-percent interest; while PEMEX, the Mexican state-owned petroleum company, holds the remaining 40 percent.
BHP expects the 3DEL appraisal well to be drilled in the latter half of this year.
Shares of BHP were up 1.23 percent on Wednesday, to US$51.84.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.