BP Expects To Spend $4 Billion A Year In Gulf Of Mexico

After deep self-examination following the April 2010 Deepwater Horizon oil spill, BP PLC (BP, BP.LN) decided not to leave the Gulf of Mexico and opted instead to increase investment as part of its renewed commitment to the region, a company executive said Monday.

"After much soul-searching in the fall of 2010, we concluded it would be wrong to walk away," BP Executive Vice President Bernard Looney said in a presentation at the Offshore Technology Conference here. "We would have been walking away not only from our past, but from a key component of our future."

BP is planning to add three drilling rigs in the Gulf by the end of the year, bringing the total number to eight, more than the company had before the oil spill, Looney said. BP also plan to spend this year $4 billion in the Gulf and expects to spend at the same level for years to come, he said.

"We hope to invest at least that much every year over the next decade," Looney said.

One of BP's major capital projects in the region, Mad Dog Phase 2, is expected to start production towards the end of the decade, he said.

Mad Dog, which was discovered in 1998 and first produced oil in 2005, is confirmed to have some four billion barrels of oil in place, Looney said, adding that puts into the "super-giant field" category.

BP is working hard to learn from the oil spill lessons and help prevent "such an accident from ever happening again," Looney said. "The Deepwater Horizon accident challenged us to the core."

Securing a "reasonable resolution to the remaining claims against us," related to the oil spill remains a challenge for the company, he said.

BP was the operator of the Macondo well where a rig it leased from Transocean Ltd. (RIG) exploded and sank in April 2010, killing 11 workers and causing the worst offshore oil spill in U.S. history