The Group’s largest project in the region since Deepwater Horizon is a result of a strategic shift towards fossil fuelsBP has started pumping crude through a new $9bn offshore platform in the oil-rich US Gulf of Mexico as it slows its transition out of fossil fuels amid growing energy security fears.
The company’s new Argos platform marks the first time it has been deployed in this region since April 2010, when the Deepwater Horizon disaster occurred, which resulted in 11 deaths and the worst environmental disaster to ever occur in US history.
The start-up of the massive new deepwater project comes at a crucial time for BP, after Bernard Looney, chief executive officer, announced in February that BP was slowing down its withdrawal from fossil fuels. This strategic shift highlights the pressure on BP, its industry and investors to continue with fossil fuel projects that are high-returning while also responding to international efforts aimed at reducing carbon emissions.
Looney stated that Argos’s move to the internet showed that it was “investing” in today’s energy systems. He said that the move would “strengthen the company’s standing in the Gulf of Mexico”, where it is the biggest producer, for many years to come.
Looney announced in February that the company will trim its oil-and-gas output by 25% by 2030, compared to a previously set target of 40%. He said that governments want BPto keep investing in fossil fuels in order to ensure an adequate supply.
Investors had also questioned previous strategies, arguing that the shift to renewable energy would hurt profits and that the company’s share price has lagged behind rivals.
US President Joe Biden urged domestic oil producers to boost their production after fuel prices reached record highs in the past year, when Russia’s invasion of Ukraine raised fears that oil supplies would not be able to meet demand.
Starlee Sykes is the head of BP Gulf of Mexico Business. She said that in an interview, the company responded to Biden’s call, and plans to continue exploring for new oilfields and gasfields.
Argos, BP’s largest new project in Gulf of Mexico for more than a decade is capable of pumping 140.000 barrels of oil and natural gas per day from fields thousands of feet under water. The company will be able to increase its production capacity in this region by 400,000 barrels per day, or nearly 20% of their total global output.
Sykes stated that the Gulf of Mexico contains some of our best barrels and he wants to explore further.
She added that BP sees potential for the region to expand production for many decades, while also aiming to reach net zero emissions by the year 2050.
“It is massively prolific” . . Sykes said that there was still a very long way to travel in the Gulf.
Argos is launching its platform amid increased concerns that a shortfall in global oil supply could lead to another spike in crude price later this year. This would be a serious threat to an economy already struggling with high inflation.
These fears were further heightened when, earlier this month, the Opec+ producer group announced that it would reduce output by more than 1mn B/D.