The US Department of Energy (DOE) announced on 10 November that it closed a $480 million loan to Arena Energy for its Project Elkhorn in the US Gulf of Mexico (GOM). The funding will be used to modernize 22 shallow-water platforms off the coast of Louisiana that will combine to produce as much as 38,600 B/D and 77 MMscf/D of natural gas.
The loan was made through the DOE’s Office of Energy Dominance Financing and is the first loan made by the office to help boost domestic oil and gas production.
“The United States is the world’s largest producer and exporter of oil and natural gas, and thanks to President Trump, American energy production will continue to grow,” US Secretary of Energy Chris Wright said in the announcement.
Based in The Woodlands, Texas, Arena currently produces about 30,000 BOPD in the GOM and expects the modernization project will add approximately 125 million bbl of oil and 250 Bcf of natural gas to US energy production.
The project is also expected to create 2,400 construction-related jobs and 400 operations jobs.
“Project Elkhorn will expand domestic oil and natural gas production, create good-paying American jobs, and strengthen our energy security while generating substantial returns for American taxpayers,” Gregory A. Beard, the director of the Office of Energy Dominance Financing, said in a statement.
Arena said that the increased production should yield an additional $1.6 billion in royalties collected by the federal government, which is more than three times the value of the loan.
“The Office of Energy Dominance Financing conducted a rigorous review of this project, and we are pleased to have earned its confidence,” Mike Minarovic, CEO and founder of Arena Energy, said in the announcement. “Reinvesting in existing infrastructure is one of the most efficient ways to add American energy production, support skilled jobs, and generate value."