BP has announced a significant move in its energy strategy by approving a $5 billion offshore drilling project in the Gulf of Mexico. The Tiber-Guadalupe oil and gas project is expected to come online within five years, with production capacity projected to reach 80,000 barrels of oil per day by 2030. This initiative is part of BP’s broader aim to boost its U.S. upstream output to over 1 million barrels of oil equivalent per day.
The development of the Tiber and Guadalupe fields, which together are estimated to hold approximately 350 million barrels of oil equivalent, marks a pivotal moment for BP as it seeks to reinforce its presence in the U.S. market. This announcement comes after a strategic shift earlier this year, where BP moved away from its renewable energy focus and reaffirmed its commitment to traditional oil and gas operations.
Strategic Goals and Production Targets
By 2030, BP aims to achieve a production target of 400,000 barrels of oil equivalent per day from the Gulf, an increase from 341,000 boepd recorded in 2024. This escalation is critical for BP as it strives to close the performance gap with competitors such as Exxon Mobil and Shell, both of which have recently outperformed BP in terms of shareholder returns.
In a related context, BP announced in January that it would reduce its workforce by 5 percent, translating to approximately 4,700 jobs and 3,000 contractors. This decision was part of a comprehensive cost-cutting strategy initiated a year ago, targeting $500 million in savings by 2025, which is a portion of its broader goal of $2 billion by the end of 2026.
Market Trends and Future Outlook
Looking ahead, U.S. energy executives are anticipating a marked increase in offshore oil production, particularly under a potential second administration of former President Donald Trump. This uptick is attributed to streamlined permitting processes, sustained investments, and advancements in drilling technology. According to estimates from the U.S. Energy Information Administration and the Bureau of Ocean Energy Management, Gulf production is projected to rise from 1.8 million barrels per day to 2.4 million bpd by 2027.
The Gulf of Mexico is also rich in untapped resources, with recent assessments indicating it contains 29.59 billion barrels of oil and 54.84 trillion cubic feet of gas in technically recoverable, undiscovered fields. A 2023 update showed a 22.6 percent increase in recoverable resources, adding 1.3 billion barrels of oil equivalent to previous estimates.
While shale oil production has provided flexibility, its growth is expected to plateau. As shale wells typically experience significant declines in output within their first few years, companies may increasingly pivot towards offshore drilling to maintain production levels. The International Energy Agency (IEA) has also highlighted the urgency for the energy sector, stating that existing oil and gas fields are declining faster than anticipated, presenting a challenge to sustain output globally.
Despite various challenges, U.S. offshore oil production remains competitive on the world stage. Its high-volume, low-decline profile is seen as a reliable investment, even amid international trade disputes and policy changes. Interestingly, even with the imposition of Chinese tariffs on U.S. liquefied natural gas (LNG), American energy exports have continued to grow.
As BP navigates this complex landscape, it stands as the last of Europe’s major oil companies to refocus on enhancing oil and gas production. In August, the company made a notable discovery in Brazil’s Santos Basin, marking its most significant find in 25 years. This development underscores BP’s commitment to solidifying its role as a leader in the global energy market.
