Gulf oil companies rethinking their deepwater development strategies

Sept. 1, 2020
In today’s market, developers in the deepwater Gulf of Mexico are pursuing infrastructure-led growth/subsea tieback strategies that will rely heavily on platform life extension projects.

A profound philosophical shift is under way within the Gulf of Mexico offshore oil and gas industry. It is a shift in the way that oil companies and owners of deepwater production platforms are thinking about the useful service lives of those and assets.

Instead of the traditional linear approach of going from first oil to divestment, there is a growing desire within the industry to shift these facilities back into production. Importantly, oil companies and owners are working to make sure they receive the needed permits before these facilities reach the end of their official design life.

At the time of writing, a number of life extension projects have already taken place in the GoM. Currently, there are reported to be 14 platforms being targeted for life extensions, and an additional 10 platforms will soon be near the end of their design life. These platforms include a number of spars, TLPs, and compliant towers that have been operating in the Gulf for close to 20 years.

Why extend in the first place? The primary reason is that existing reservoirs and future field development projects can be connected to these platforms via subsea tiebacks. These tiebacks, in turn, can then justify the operational economics of these deepwater platforms for many years into the future.

And as greenfield projects have been deferred and delayed, even more attention is placed on the industry’s existing deepwater platforms. In the Gulf, oil companies are increasingly adopting a “do more with less” philosophy that has been made possible by the refinement of several subsea technologies.

Advances in subsea technology

With respect to reservoir output, advances in improved oil recovery and workover systems have been key to bolstering production. This is exemplified by growing use of rigless well intervention (RLWI) techniques, in which a DP-2 vessel is deployed to stimulate wells, to the tune of barrels per minute. RLWI techniques are deployed in open water using coiled tubing downlines that connect to the appropriate subsea equipment, once it has landed and been installed atop the relevant christmas tree. The operational benefits and costs savings associated with this approach have enabled oil companies to execute multi-well campaigns in a compressed timeframe. As a result, RLWI activities have significantly increased in recent years.

Advances in subsea tieback technology are just as critical in terms of output, as they allow for stranded assets to be reached through long step out distances. One of the longest tiebacks in the Gulf was installed on Shell’s Mensa project in 1997; that tieback had a step out distance of 63 mi (101 km). Contemporary subsea tieback technology has continued to develop, and it is complemented by advances in the flow assurance and remediation systems, as well as subsea boosting.

Regulatory aspects

Economics and technology factors aside, the Bureau of Safety and Environmental Enforcement (BSEE) ultimately decides on whether a life extension gets approved and moves forward. The principal purpose of a life extension, which functions as supplementary assessment, is to ensure that a platform can continue producing safely beyond its engineered design life, by complying with BSEE’s requirements and regulations.

It is vital to note that due to the different types of platforms that exist in the deepwater Gulf, a ‘one approach fits all’ is not feasible when validating areas of interest. These areas of interest relate to topsides, splashzone, and subsea systems, and require careful allocation of time and resources. The design life will vary for each platform; however, on average it tends to be around 20 years or more for the 25 platforms that were brought online from 1997 through 2004, and which continue producing.

It is also important to note that the regulatory requirements for life extension projects are evolving and are subject to change. However, it can be said that life extensions are a multi-layered endeavor requiring a Certified Verification Agent (CVA)—an independent party—to analyze, review, and validate the supplementary assessment executed by an oil company. More specifically, assessments are comprised of service companies executing offshore inspections and data gathering activities; and this is complemented by engineering and consultancy firms that assess the data gathered and perform further data modeling and calculations.

The end result are conclusive findings based on the aforementioned. Said findings are aggregated, centralized, and analyzed by the oil company and the CVA, prior to being submitted to BSEE by the oil company and the CVA. Due to the multi-faceted aspects of life extension projects—which can make them thoroughly lengthy—it is critical to execute a life extension in advance of a platform nearing the end of its design life. Thus, if any added tasks are required by BSEE, there is sufficient time to do so. It is also key to consider that COVID-19 has impacted mobilizing personnel to and from offshore platforms, and this in turn can have a bearing on the pertinent offshore inspections. 

Infrastructure-led growth

Subsea tiebacks have taken on an even larger role as more deepwater oil companies pursue the strategy of infrastructure-led growth (ILG). In sum, the key advantage of the ILG strategy is that it accelerates first oil and enables smaller oil companies to produce millions of barrels of oil without owning the third-party host platforms. It should be noted that at present, two Gulf of Mexico oil companies exclusively follow the ILG strategy.

Infield risers and export risers are treated separately in terms of life extension. Thus, ILG requires that a third-party host platform and its export risers nearing the end of their design life are able to continue to produce, especially when a subsea tieback and associated infield risers are connected to a platform years after said platform and export risers were first installed.

Take, for example, a platform installed by company A with export risers that are slated for a life extension in 2021. However, on this same platform, infield risers were connected to the facility by oil companies B and C in 2015 and 2018, respectively. These will have a separate design life and associated life extension date.

The example cited above illustrates the additional layers and sometimes hidden challenges that life extension projects often contain. These challenges are often not obvious at first glance, but they must be thoroughly considered and investigated. As expressed previously, 25 platforms were brought online in the 1997-2004 timeframe, which continue to produce. This a stark contrast to 2005-2020 when 24 platforms were installed which are still producing. Fewer platforms have been brought online in recent years, a fact that underscores the growing demand for access to existing and operational third-party platforms. By enabling companies to monetize reserves, the ILG/subsea tieback strategy is adding to the momentum for platform life extension.

First oil acceleration

In recent years, subsea tiebacks have been critical to accelerating first oil on a number of deepwater projects in the Gulf of Mexico. In 2019, for example, a tieback enabled one ILG-based deepwater project to reach first oil in four months, from drilling to production.

How is first oil reached in months? In LLOG’s case, Rick Fowler commented in a recent interview that: “Before we even spud the first well on an exploration prospect, we are already preparing to execute it as a development project. Our exploration success rate is about 70%, so we have come to expect exploratory success and the need to develop the reserves.”1

This is a unique step-change for field development, as compared to the traditional industry approach of conducting an appraisal after a discovery has been made. With ILG this can be sidestepped; thus pre-FEED, FEED, and field development planning are not required. An FID is still required for the project to move forward.

Kosmos Energy counts on the ILG approach as part of its development strategy. “We approach host platforms even before drilling our exploration wells so that we can select our host and establish commercial terms,” said Richard Clark, Kosmos Energy’s Senior Vice President and Head of Gulf of Mexico Business Unit. “Once we have a discovery this allows us to move fast.”2 Beacon Offshore Energy is also leaning heavily upon the ILG and subsea tiebacks for its deepwater strategy in the Gulf of Mexico, as highlighted by Joe Leimkuhler in a recent Marine Technology Society event.


Over the years, oil companies in the Gulf of Mexico have continued to show their ability to adjust and adapt to changing market conditions. Adopting new techniques and technologies has been a big part of that. In today’s market, developers in the deepwater Gulf are pursuing ILG/subsea tieback strategies that will rely heavily on platform life extension projects.




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