BHP has a 23.9% participating interest in the field, with operator BP PLC (LON:BP.) holding a 60.5% stake and Union Oil Co of California, an affiliate of Chevron Corp (NYSE:CVX) , holding the other 15.6%.
The project, located in the Green Canyon area of the deepwater Gulf of Mexico, is a southern and southwestern extension of the existing Mad Dog oil field.
The second phase will include a new floating production facility with capacity to produce up to 140,000 gross barrels of crude oil a day from 14 producing wells.
Steve Pastor, operations president of BHP's Petroleum division, said: "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.
“It offers an attractive investment opportunity for BHP Billiton and aligns with our strategic objective to build our conventional portfolio through the development of large, long-life, high-quality resources,”
BHP said production is set to start from the field in its 2022 financial year.