GULF OF MEXICO

This outline of procedures for MMS safety performance review shows (in red on the right-hand side) the various steps that can be taken under this rule in extreme cases. Authorities for each step are given in parentheses. DQ - disqualification; RD - MMS regional director; AD - MMS associate director; APR - annual performance review; and Secretary - Secretary of the Interior [39,060 bytes].

May 1st, 1998

Jennifer E. Smith
Houston

MMS: Two operators unacceptable; nine rated poor

Two operators in the US Gulf of Mexico were rated unacceptable and nine others were rated poor in 1997, under the current version of the US Minerals Management Service's proposed postlease safety rule. Both groups risk being banned from operatorship. The agency declined to reveal the names of the companies so designated.

The agency (MMS) has created a complex formula to determine a normalized Performance Value Index. The index considers incidents of noncompliance, including those leading to civil penalties, and actual accidents. MMS officials stressed that this score was not the deciding factor but only a place to start looking at companies. All would be given a chance to present their side of the story. It was also stressed that this score was for internal MMS use only and should not ever be revealed to the public.

Using a combination of the index and review of all information with companies themselves, performance will be rated. Companies whose performance is unacceptable risk the penalties of not being granted any more leases or being banned from operatorship. Before any such extreme judgment, however, there will be counseling between the company and MMS. One requirement will be the submission of a performance improvement plan.

Companies whose rating is poor also must work with the MMS to improve their operations and submit a performance improvement plan. A procedure has been developed to deal with companies at all performance levels (see accompanying flowchart).

Using the performance score alone, though admittedly incomplete as a measure, the MMS characterized 34 companies operating federal leases in 1997 as "good"; 74 as "acceptable"; nine as "poor"; and two companies as "unacceptable."

The MMS will continue to meet with all operators on at least an annual basis and discuss maintaining or improving safety levels. Those operators with past problems on their records may be subject to periodic performance analysis.

Because a company is removed from operatorship does not mean it is not a lessee; if it is a joint lessee, other lessees must select a new operator. If it is a single leaseholder, it must contract an operator, which will be closely monitored.

The planned rule is in the early stages or development, and any part of it could be subject to change. The period for comment will extend through early May. The MMS expects its final rule to be published by late summer or early fall.

Independents reach for US Gulf acreage

For MMS Lease Sale 169, the independents, as opposed to majors, led the pack in lease buying in most water depths, says James Dodson, of James K. Dodson Co. of Dallas. In pro forma results, in water depths up to 350 ft, independents took high bid for 73% of the leases; in 350-1,000 ft, independents took 85%; in 1,000-3,000 ft, independents had 81%; and even in the greater than 3,000 ft range, independents took a respectable 41%.

One fact which alters the picture a little is that the 3,000 ft plus water depth range was by far the largest section of the sale, with 510 leases on the block. In contrast, there were only 184 leases in the less than 350 ft range, 41 in the 350-1,000 ft range, and 59 in the 1,000-3,000 range.

In the deeper water, the sale was definitely dominated by majors. In water depths greater than 3,000 ft, Shell was the high bidder on 97 leases, Mobil, 93, and Chevron, 63.

E&P Briefs:

  • TransTexas Gas said it commenced production of natural gas and condensate from its Eagle Bay discovery in Galveston Bay. Production from the Eagle Bay field may reach 75-100 MMcf/d of gas and 17,000 b/d of crude and condensate by July.
  • Taylor Energy announced the discovery of four new wells on the South Marsh Island 73 Field on Blocks 68,69, 72, and 73. The company says the discoveries will increase the reserve base of the field by 6 million bbl of oil and 12 Bcf. First production from the field is expected this month.
  • Murphy Oil said a well at Vermilion Block 130 has encountered 85 ft of net natural gas in three separate sands. By using an existing platform in a nearby field, production should commence in 2-3 months. Murphy Oil operates the well and holds 75%; the rest is held by Callon Petroleum.
  • A discovery well was drilled in Texas state Tract 84 in the White Heron South area of Galveston Bay by Vintage Petroleum. The well was drilled to a depth of 9,918 ft, and encountered approximately 36 ft of net pay in a Frio sand. The well is currently producing at 12 MMcf/d of gas and 106 b/d of condensate.

Copyright 1998 Oil & Gas Journal. All Rights Reserved.

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