Chevron Eyes US Gulf Growth, Plans New Wildcat

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Chevron is preparing to drill a new exploration well in the US Gulf of Mexico in the coming months as it targets significant production growth in the deepwater play over the next few years.

The US supermajor has filed an exploration plan with offshore regulators and confirmed that it plans to spud a wildcat called “Polyphemus” in the first half of 2023.

The well will be located in Mississippi Canyon Block 608 (MC 608), one block to the east of the company’s Ballymore discovery, a field that will underpin that company’s plans to increase production from the US Gulf to more than 300,000 barrels of oil equivalent per day by 2026.

It will likely be Chevron’s first operated exploration well in the US Gulf since last year’s unsuccessful Starman probe. The company has become more selective in its upstream projects in the US Gulf, favoring a “drill to fill” strategy focused around existing hubs rather than aggressive greenfield growth.

Chevron has allocated more than 20% of its budgeted $11.5 billion in upstream capital spending for projects in the US Gulf in 2023. That will include advancing projects such as its operated Ballymore tieback, the Anchor hub development and the St. Malo Stage 4 waterflood scheme.

Chevron's Deepwater US Gulf Assets


Making a Commitment

Chevron has not specified how much of its upstream spend will go toward exploration in the Gulf of Mexico or elsewhere. A spokesperson said Chevron “remain(s) committed to safe exploration in the [US Gulf] region” and “expects to maintain a significant presence in the [US Gulf] for many years to come.”

“As a result of these initiatives and our non-operated joint ventures, we plan to grow [US Gulf] production to more than 300,000 barrels per day by 2026,” the spokesperson added.

Chevron produced about 208,000 boe/d in 2021, up from 201,000 boe/d in 2020 but down from 230,000 boe/d in 2019. The company will disclose its 2022 US Gulf production results in its annual report, likely next week.

Chevron is the third largest producer in the US Gulf behind European giants Shell and BP, both of which look poised to boost production to more than 400,000 boe/d by mid-decade.

Chevron is a 15.6% partner in BP’s Argos project (Mad Dog 2), which is now due to start up sometime this year after a mechanical issue delayed last year’s first oil plan.

The California-based company is also a 40% partner in Shell’s Whale project, due on line in 2024, the same year as Anchor. It has exited other earlier-stage projects led by Shell located near Whale, including Leopard and Blacktip, deciding to allocate resources elsewhere.

The carbon intensity of Chevron’s US Gulf operations is about 6 kilograms of CO2 equivalent per boe, according to the company.

Drilling the Norphlet

The Polyphemus well will be drilled in MC 608, according to Chevron’s exploration plan that was approved last month. US records show no drilling permit currently filed, but the lease is set to expire at the end of June.

Gulf sources say Chevron will be targeting a prospect in the Jurassic-aged Norphlet trend, similar to Ballymore. Only Shell has successfully produced from the technically challenging Norphlet to date, becoming the first operator to do so when its Appomattox project came on line in 2019.

Chevron sanctioned Ballymore last year as a $1.6 billion tieback to its operated Blind Faith platform. It aims to produce 75,000 b/d gross from three wells starting in 2025. TotalEnergies owns 40% of Ballymore.

Chevron confirmed that it operates Polyphemus with a 60% stake. Anadarko US Offshore (now Occidental Petroleum), which originally leased the block in 2013, now owns 40%.

Oxy did not respond to a request for comment.

Corporate Strategy , Exploration, Deepwater, Majors, Upstream Projects, Offshore Oil and Gas
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