A case of “oops, shouldn’t have turned over that rock” at BHP Billiton? That could explain an embarrassing confession of a cost blowout in its latest production and development reports for the September quarter.

Higher costs at two of the company’s big oil and gas projects in the US took the gloss off another record performance by the major miner in the quarter.

It was only in August, when it released its 2007 financial results, that BHP surprised by revealing it had held cost increases to around 3.6% over the year. That was considered to be a strong part of the performance, more so than another year of record earnings, because the mining and oil industries the world over are battling cost pressures.

Rival Rio Tinto had to own up to cost pressures in its 2007 half year report in August and in its September quarter report earlier this month. So news of blowouts in the US surprised investors who marked down BHP shares by 55c at one stage to a low of $45.33, before they recovered.

Costs rose on the massive Atlantis South project and the Neptune project in the Gulf of Mexico. These are deepwater projects in hurricane territory as well, which means delays and other hold-ups can be frequent in the late northern summer and autumn.

BHP Billiton owns 44% and says its share of the project cost had jumped to $US1.630 billion ($A1.84 billion), from $US1.5 billion ($A1.69 billion). The company’s share of costs at its 35% Neptune project increased to $US405 million ($A456.47 million), from $US300 million ($A338.12 million).

The higher Australian dollar makes the rise look smaller than it has: it would have been more substantial if the exchange rate was around the 78US at the start of this year.

BHP also revealed the start-up date for Neptune had been delayed with first production now due in the first quarter of 2008, rather than at the end of the year. But there were no cost problems reported in Australia, which is an encouraging sign. A year ago the company was struggling with higher new mine or well costs in its iron ore, nickel and oil and gas businesses. But apart from this disappointing news, the company revealed it had a record quarter for the glamour mineral at the moment, iron ore.

BHP produced 25.867 million tonnes of iron ore in the quarter, up 7% from the corresponding quarter in 2006. This followed the build up of output from its Rapid Growth Project 2 in Western Australia and a record performance at the Samarco mine in Brazil. BHP is moving to lift iron ore output to 300 million tonnes by 2015, to meet increasing demand for the metal from China.

Copper output climbed 23% from the September, 2006, quarter to 307,800 tonnes, due to the continuing build up of production at the Escondida and Spence mines in Chile. It was lower however than the June quarter figure by 10%.