Maersk Oil Exits US Gulf Oil Development

Published at 10:00AM - 03/11/16

Maersk Oil announced in its third quarter results that it is planning to shed its interest in the Buckskin oil and gas field, in the US Gulf.

The field is operated by Repsol, who took the project over from Chevron after it cancelled its development plans for the area in 2015 and transferred its 55% share to three other companies.

“In the US, Maersk Oil has decided to exit the Buckskin project due to the challenged economics. This is also in line with the changed strategy to focus on fewer geographical areas,” the company informed.

Maersk Oil Exists US Gulf Oil Development

Repsol had a 12.55% stake in the project, which moved up to 27.8% when Chevron decided to exit.

Maersk held the largest participating interest (44.4%), while Samson Offshore held the remaining 27.8%.

Maersk Oil Exits US Gulf Oil Development
Chevron abandoned the Buckskin project in January 2016

Before Chevron’s decision to leave the project, the plan was to develop the field with the nearby Moccasin discovery, with initial estimates to produce 30,000 barrels of oil per day (bpd) and 15 million cubic feet of gas per day.

Chevron was planning to tie back the field to the Moccasin discovery, but then decided to quit the US$2.7 billion (£2.18 billion) project due to the high costs involved.

Buckskin Viability Under Debate

“Right now, the costs in the deep water have not come down qite as fast as they have onshore. We obviously have seen some rig rate reductions but in generation as we get to deeper and deeper water, some projects are challenged,” Chevron’s Chairman and CEO John Watson said at the time.

“I won’t say that the project couldn’t have gone forward (…) but, relative to our alternatives, we felt that for the foreseeable future, we’ve got better places to put our money,” he explained.

Now, Maersk Oil’s decision is raising questions over the viability of the Buckskin project, although it follows the company’s general focus on existing projects.

“Maersk Oil will mature existing key development projects, while keeping exploration activities and expenses at a low level,” the company explained.