BP is doubling down on its U.S. natural gas production, particularly in the Haynesville Basin, as domestic gas prices surge. CEO Murray Auchincloss, speaking at the CERAWeek conference in Houston, highlighted the company’s renewed focus on oil and gas, marking a strategic pivot from its previous emphasis on renewable energy.
Haynesville Basin: The Right Time to Ramp Up
The Haynesville Basin, located in eastern Texas and northwestern Louisiana, has long been a critical natural gas-producing region. With U.S. benchmark gas prices more than doubling in the past year to around $4.4 per million British thermal units (mmBtu), BP sees a lucrative opportunity to increase production.
In 2023, BP produced 434,000 barrels of oil equivalent per day (boepd) in its U.S. onshore shale operations, with 264,000 boepd being natural gas, primarily associated with crude oil output. The company currently operates two rigs in Haynesville, compared to four each in the Permian and Eagle Ford basins, but rising prices could lead to increased drilling activity.
Shifting Strategy: More Oil and Gas Investment
Last month, Auchincloss announced a major shift in BP’s strategy—reducing investments in renewable energy and increasing annual spending on oil and gas to $10 billion. This move aims to boost earnings and restore investor confidence. Previously, BP had set a goal to reduce its oil and gas output by the end of the decade. However, under the new strategy, the company now plans to grow production to between 2.3 million and 2.5 million boepd by 2030.
BP’s increased oil and gas focus will center on the U.S. and the Middle East, leveraging existing assets and infrastructure to drive growth.
Gulf of Mexico Deepwater Expansion
Beyond shale operations, BP is making bold moves in the Gulf of Mexico, targeting deepwater oil reserves. The company recently approved the development of the Kaskida oilfield, located in a geologically complex region known as the Paleogene. Additionally, BP plans to move forward with its second Paleogene project, Tiber, later this year.
“We have a fabulous position here in the Gulf of America,” Auchincloss stated, referring to the company’s 10 billion barrels of oil and gas resources in place within the Paleogene play. BP also intends to continue exploring new opportunities in the region, positioning itself as a major player in the next wave of deepwater development.
Market Implications and Industry Outlook
BP’s renewed emphasis on natural gas comes at a time when LNG export terminals along the Gulf Coast are ramping up capacity. The U.S. is expected to significantly increase its LNG exports in the coming years, with new facilities from Venture Global LNG, Cheniere Energy, and ExxonMobil/QatarEnergy coming online. This growing demand for U.S. natural gas presents substantial opportunities for BP and other producers.
For oilfield service providers, BP’s expansion in both shale and deepwater drilling could lead to increased demand for drilling, completions, and midstream infrastructure services. As the company shifts its capital allocation toward traditional hydrocarbons, it will also create opportunities for midstream and pipeline companies to support its transportation and export logistics.
Final Thoughts
BP’s decision to expand natural gas production and deepwater drilling aligns with broader industry trends favoring reliable, scalable energy sources. While the company previously pursued aggressive renewable energy goals, its latest strategy shift reflects a pragmatic approach to market realities. With gas prices on the rise and global LNG demand growing, BP’s U.S. operations—spanning the Haynesville Basin, the Permian, Eagle Ford, and the Gulf of Mexico—are set to play a crucial role in the company’s long-term growth.
For stakeholders in the energy sector, BP’s pivot underscores the continued importance of natural gas in the global energy mix. Whether through shale production or deepwater exploration, BP is positioning itself as a leader in the next phase of the oil and gas industry’s evolution.
