BHP Billiton to spend $2.2bn on next phase of Mad Dog

BHP Billiton announced on Wednesday that its board had approved expenditure of $2.2bn for its share of the development of the Mad Dog Phase 2 project in the Gulf of Mexico.

The FTSE 100 company holds a 23.9% participating interest in the Mad Dog field.

BP, the operator, holds a 60.5% participating interest, and Union Oil Company of California - an affiliate of Chevron - holds the remaining 15.6%.

During the fourth quarter of 2016, BP sanctioned the Mad Dog Phase 2 project.

The project, located in the Green Canyon area in the Deepwater Gulf of Mexico, is a southern and southwestern extension of the existing Mad Dog field.

BHP said it includes a new floating production facility with the capacity to produce up to 140,000 gross barrels of crude oil per day from up to 14 production wells.

Production is expected to begin in the 2022 financial year.

“Mad Dog Phase 2 is one of the largest, discovered and undeveloped resources in the Gulf of Mexico, one of BHP Billiton's preferred conventional deep-water basins,” said president of petroleum operations Steve Pastor.

“It offers an attractive investment opportunity for BHP Billiton and aligns with our strategic objective to build our conventional portfolio through the development of large, long-life, high-quality resources.”