BP, the British energy giant, has revealed plans to drill a new oilfield in the Gulf of Mexico, a move announced alongside its second-quarter profits surpassing forecasts.
Expanding Core Oil and Gas Business
The London-listed company disclosed on Tuesday its intention to construct a sixth platform in the Gulf of Mexico. This platform will be used to extract 80,000 barrels of oil per day from the Kaskida field, which was initially discovered in 2006.
BP’s chief executive, Murray Auchincloss, who took over from Bernard Looney last year, has pledged to refocus the company on expanding its core oil and gas operations while providing greater returns to shareholders.
Kaskida: A “Cool” and High-Quality Project
Commenting on the new project, Auchincloss expressed enthusiasm for Kaskida, describing it as “really cool.” He highlighted its vast potential, stating, “It is 10 billion barrels of oil in place in the Gulf of Mexico. This first sanction is 275 million barrels at less than $5 billion (cost).”
Auchincloss emphasized the project’s high quality and low risk, emphasizing the need for new developments to meet global oil demand, which currently exceeds 103 million barrels per day, with natural reservoir decline rates of 3 to 5 percent annually.
Strong Second-Quarter Results
BP’s underlying profit for the second quarter reached $2.8 billion, surpassing analysts’ expectations of $2.5 billion, aided by a lower tax bill.
The company responded by increasing its dividend by 10 percent to 8 cents per share and reaffirming its commitment to buying back $1.75 billion worth of shares per quarter for the remainder of the year.
Share Price Reacts Positively
Following the announcement, BP’s shares experienced a 1 percent increase, reaching 458.5 pence in late morning trading in London.
Expansion Amidst Peak Oil Demand Projections
Interestingly, BP’s expansion in the Gulf of Mexico is taking place even as the company’s own projections suggest that global oil demand will have peaked by the time the Kaskida field commences production in 2029.
This raises questions about the long-term viability of such investments in fossil fuels as the world transitions towards cleaner energy sources.