US upstream week in brief: Chevron lets Mad Dog off the leash
Not one but two deepwater Gulf of Mexico projects moved closer to development this week with Shell sanctioning Kaikas and Chevron sanctioning Mad Dog Phase II. This news is a positive sign for the region, proving that there is still money to be spent and made in deepwater GoM. GoM operators have scaled back costs to bring down project breakevens, but can these projects still compete with higher return projects onshore? Meanwhile, activity onshore continues as proppant producer and supplier Hi-Crush diversifies its portfolio by acquiring Permian Basin Sand Co. for US$275 million in the heart of the Permian Basin. WhiteWater Midstream is also making moves to keep up with projected Permian activity growth and announced the construction of its new Agua Blanca Pipeline with an initial capacity of 1.25 bcfd from Reeves County to Waha Hub. Will Agua Blanca add sufficient Permian gas transport capacity or will the region face challenges akin to the Marcellus?