BHP to spend $2.2bn on US Mad Dog oil project

Mining giant BHP Billiton (ASX, NYSE:BHP) (LON:BLT) approved Thursday a $2.2 billion investment to expand its Mad Dog deep-water oilfield in the Gulf of Mexico.

The expansion of the project, operated by BP (LON:BP.A) (NYSE:BP), has the potential to increase production to 140,000 barrels of oil per day from the about 80,000 barrels it currently generates.

It follows a December decision by joint venture partner BP, which holds a 60.5% stake in the project, to go ahead with Phase 2 in the Green Canyon deep-water area.

The move is part of BHP’s strategy to increase spending on copper and petroleum assets, two of its key pillars of projected growth.

“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 Steve Pastor, president of petroleum operations, in the statement. “It offers an attractive investment opportunity for BHP Billiton and aligns with our strategic objective to build our conventional portfolio,” he said.

The second phase of Mad Dog is expected to begin production in late 2021.