BP Begins Production from Horn Mountain Prospect

BP has begun production from a single well at its Horn Mountain development in the Gulf of Mexico. The Horn Mountain spar is located in 5,400 feet of water approximately 100 miles southeast of New Orleans.

As seven additional production wells are completed production is expected to build from a startup rate of 15,000 thousand barrels of oil and 12 million cubic feet of gas per day to a peak rate in excess of 65,000 barrels of oil and 68 million cubic feet of gas per day in 2003. The production facility can accommodate additional incremental production if new discoveries are made in the region.

The $600 million project is expected to result in ultimate recovery of an estimated 150 million barrels of oil and gas equivalent.

BP is the operator of the Horn Mountain field and holds a 67 percent equity interest. Occidental Petroleum Corporation holds the remaining 33 percent. Horn Mountain is the deepest free-floating dry tree system in the world. It is the second BP-operated floating production facility in the Gulf. The project went from discovery to production in just under 40 months.

Leases for the Horn Mountain field were acquired in 1997 and 1998. Exploration drilling began in July 1999 and a discovery was announced in August 1999. Delineation drilling began immediately, taking advantage of rig availability and advanced field planning. The decision to immediately appraise the field cut months, if not years, off the total development time.

BP and Occidental sanctioned the project in October 2000, and construction of the spar components and topsides began immediately in Pori, Finland, and Ingleside, Texas. Eight production wells and 2 injection wells were drilled in 2001 using the semisubmersible drilling rig Ocean Victory. The wells were drilled in world-class time -- averaging 16 days per every 10,000 feet drilled.

The completed spar hull -- the submerged portion of the structure -- sailed from Finland in April 2002, and arrived in the Gulf in late May. The topsides production facility and quarters packages sailed from Ingleside in early June. The spar hull and topsides facilities were mated in June.

BP is one of the largest acreage holders in the deepwater Gulf with more than 650 gross blocks in water depths greater than 1,500 feet. The company has a substantial reserve base in the deepwater Gulf.