Maersk sheds Buckskin

02 Nov 2016

02 Nov 2016

The Danish player revealed in its third-quarter result on Wednesday, which showed a positive result on cost cuts and production efficiency, that it intends to shed its interest in the Repsol-operated Lower Tertiary oil and gas field.

"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 said.

Spain's Repsol took over the challenging project from Chevron after the US supermajor cancelled plans for its development late last year, transferring its 55% stake to three other parties.

Repsol had already owned 12.5% - and also operated the 2009 discovery well - but moved up to 27.8% once Chevron exited. Maersk held the largest stake - 44.4% - with US junior Samson Offshore on 27.8%.

Before Chevron exited Buckskin, the plan was to co-develop the field with the nearby Moccasin discovery. Initial production rates were pegged at around 30,000 barrels per day of crude and 15 million cubic feet per day of gas.

When Repsol took over it said it was "evaluating options and future plans", with a final investment decision expected as soon as the fourth quarter this year.

Sources suggested earlier this year that Repsol’s best option would be to tie back the field to Anadarko Petroleum’s Lucius spar, as Chevron had planned.

Lucius lies less than 10 miles (16 kilometres) east of Buckskin in about 7100 feet (2164 metres) of water.

Repsol was believed to have earlier this year solicited various third parties to carry out early and informal evaluations of development options for Buckskin.

Buckskin lies in a remote area of the US Gulf, deep in south-eastern Keathley Canyon.

Project costs were said to be the primary factor in Chevron’s decision to quit Buckskin. Unofficial estimates seen by Upstream earlier this year suggested Chevron’s price tag was about $2.7 billion for the development.

Chevron had originally planned a standalone floater for Buckskin and Moccasin, but scrapped the idea in favour of a tie-back.