Independents entering deepwater action

Of the 56 producing deepwater fields, 22 are operated by non-majors, with 13 being either subsea projects or containing a subsea component, according to a recent MMS deepwater report.

Practice makes perfect

Mariner Energy first sought gas in the Gulf's deepwater six years ago.

Mariner defines deepwater not strictly by water depth but by the technology applied in drilling and production, so Mariner considers a subsea completion in 400 ft of water, as well as the use of a floating rig rather than a jackup, to be deepwater. Mariner Energy Senior Vice President David S. Huber said the definition hinges on the fact that the people, equipment, and the risks faced are more akin to those associated with deepwater.

"Whether you're in 600 ft of water or 2,000 ft of water, you face similar risks," he said.

Huber says independents like Mariner tend to shy away from trying new technology.

"Until there's a good track record, we're such a small company, we don't want to pay for the learning curve," Huber said.

Any error can hurt.

"We can't afford a mistake, whether it's a fiscal mistake, an environmental mistake, or a safety mistake," he said.

And regulatory agencies now understand that the independents cannot afford to skimp in any area, Huber said. One major environmental or safety slip-up has a far more significant effect on an independent's business than it does on a major oil company.

In the area of total deepwater production, deepwater oil and gas output by independents seems to have leveled off. The MMS said it cannot speculate on whether this trend will continue.

"We have to be better at what we do because we're so much more exposed as a risk ratio compared to the majors," Huber said.

Mariner's approach remains with the avoidance of untested, unproven technology.

"We rarely want to do anything new," Huber said. "We want to do the same thing time and time again. Practice makes perfect."

That doesn't mean the company's unwilling to try out a new application of a technology or to import proven technology from other offshore areas, Huber said.

As an example, Mariner was the first to use multiphase meters in the GoM.

Partners in Canyon Express, a joint development of the Camden Hills, Kings Peak, and Aconcagua fields in 5,000 to 7,200-ft water depth, tested the meters for reliability in the Gulf. As one of the partners along with Pioneer, Marathon, BP, and operator TotalFinaElf, Mariner was able to learn about the multiphase meters. Mariner sold its 25% interest in Aconcagua to Pioneer and Nippon earlier this year and later applied its knowledge of the multiphase meters to its King Kong/Yosemite field in Green Canyon blocks 472, 473, and 516. Thus, while the technology of these wet gas meters was studied for Canyon Express, Mariner established the first GoM application of the technology.

Mariner has also been known to import North Sea methods to help save money. Huber said Mariner began entering and abandoning subsea wells with a boat last year, rather than paying the high costs associated with semis. The use of boats for North Sea subsea activities began in 1985, he said, and it became routine there soon after.

"It's new technology for the Gulf, but it's not really new technology. It's pasting together existing technology in an innovative way," he said.

The Houston-based independent uses a three-tiered tactic to ensure the repeatability of its methods. It nurtures relationships with specific vendors to attain high management attention from the vendors and contractors. Loyalty to certain products, like Cameron's trees and Kværner's FSSL control systems, ensures those companies have their best people working the Mariner account, Huber said. In line with using the same products time and again is stocking up on the equipment to decrease cycle time.

"We know we're going to use it sometime, we just don't know when our next discovery will be, so we might as well have the equipment ready," he said.

The company also works to preserve its image as a company that's good to do business with. Huber said Mariner works to maintain this reputation with contractors and majors. With majors, the payoffs come in terms of access to:

• Infrastructure
• Exploration opportunities
• Exploitation opportunities.

"We view ourselves as being a help to majors," Huber said. "A 25-MMbbl field is rarely significant to a Shell. A 25-MMbbl field is very important to Mariner Energy."

Allsea's Solitaire preparing steel catenary riser pull-in for the King Kong and Yosemite projects.

Having a reputation as being a good company to do business with means majors just might shop the disappointing 25-MMbbl field around to Mariner, he said.

Mariner puts its final focus on risk management. He said Mariner tends to spread the risk to companies best equipped to mitigate the risk. If the goal is to prevent umbilical failure, for example, Mariner makes sure spare lines are included and pins the cost of repair on the contractor, which gives the contractors an incentive to make sure Mariner has a system that works, Huber said.

These three cornerstones of the Mariner approach have yielded the company a 97% uptime for its nine subsea production systems.

"We've done some things out there that were scary," Huber said.

These included pipeline repairs in then water-depth records on Dulcimer in Garden Banks block 367 in 1,100 ft of water (Offshore, June 1999) and Pluto in Mississippi Canyon block 718 in 2,150 ft water depth (Offshore, June 2000).

"We do have systems in place that if we have a problem, we can get right back onstream," Huber said.

New technology Mariner hopes to see is the ability to have deepwater oil tiebacks that extend beyond 15-20 mi, as gas tiebacks can reach up to 68 mi, Huber said. The increased tieback distance would open up the Gulf to more opportunities for projects, he said.

"There's a heck of a lot more real estate you can go after," he said.

The combination of increased tiebacks, subsea separation, and multiphase pumps would be a boon to independents, Huber said.

"It's important technology to a company like mine that wants to extend the radius of tieback to infrastructure so we have more opportunities for tiebacks," he said.

Where Mariner has found a way to thrive in the deepwater GoM, the company also believes it can turn the techniques for use on the shelf.

Workers lower a 30-in. drill bit through the rig floor of the Noble Max Smith while drilling wells for Dominion's Devils Tower discovery.

"We started as a land company. In 1989, we went offshore. In 1992, we got into deepwater. Now, we have a mission to go back onto the shelf. We feel that some of the business and technical approaches that have made us a success in deepwater can be applied to the shelf," Huber said.

Coming up aces

Since 1995, when Dominion's only deepwater holdings were percentages in the Popeye and Neptune deepwater fields, the company has garnered interest in 106 blocks in the GoM in water depths exceeding 600 ft, the depth at which Dominion considers deepwater to begin.

A struggling shallow water program led Dominion to seek a future in the deepwater, Tim Parker, senior vice president and general manager of offshore, said.

"If you're in trouble, look for other things," he said, adding that the company made a financial commitment from the beginning to pursue the Gulf's deep waters in the right way. Doing that meant bringing in outside talent with years of deepwater experience, and Kevin Guilbeau, vice president of offshore exploration, and James D. Abercrombie, vice president of offshore production, fit that bill.

Rig hands from the Noble Max Smith are lowered to a deepwater supply boat in Mississippi Canyon block 773.

Abercrombie said the company's approach was to participate in fields as a partner to build up its deepwater experience.

And Dominion didn't want to make mistakes.

"This is expensive poker," Parker said.

By buying into Popeye in Green Canyon block 116, Domi-nion had some say in the design and development of the Shell-operated field. By the time the company took a 50% interest in Viosca Knoll block 826, it became a true JV partner in the engineering and development phase of the Kerr-McGee-operated field.

Dominion operates Devils Tower, a Spar development in Mississippi Canyon block 773 in 5,600 ft water depth.

"We know what we're doing now," Parker said.

Abercrombie said Dominion is matching its engineering skills to the challenging Gulf of Mexico environment. The Gulf's high wave and wind loading and loop current factor into development decisions. In the case of Devils Tower, he said, there was a higher wave and wind loading confluence where the Spar went.

"We have engineered a Spar to handle that high-level type of loading," he said.

Technology remains a focus for Dominion, Parker said, but the company is far more interested in applying it than developing it.

"We've had to stretch the technology, but we haven't had to invent technology," he said.

With the oil and gas industry's business environment changing, Abercrombie said, some companies have continued to dedicate funds to R&D.

"Service companies are providing technology that the entire industry is using," Aber-crombie said.

Another plus that's made a difference for the independents in the deepwater GoM, Guilbeau said, is the availability of affordable 3D seismic data.

"If we want to do this right, we need to do this through the exploration process," he said.

Having access to affordable data was a major part of the independent's progression into the deepwater, Parker said, and the next step is cheaper subsalt seismic.

"Salt is hiding a lot of oil fields," he said.

Guilbeau said the company has fine-tuned its approach to developing deepwater fields. Dominion uses cost-effective development systems like Spars, and it limits the number of expendable wells drilled during appraisal by using appraisal wells as development wells. The company also wants high-rate completions in high-rate turbidite locations, and it often acquires more interest in a field after a find.

Ideally, Dominion has one to two major projects – like Devils Tower due online next year and Front Runner due onstream in 2004 – in the works at all times, Parker said.

Generally, the company partners with fellow independents.

"We prefer partnering with most who are also independents because we look at the world the same way," Parker said.

Because Spars make smaller fields more economical to develop, independents and majors alike are using the technology, Guilbeau said.

"The Spar story is a good one for the independent," he said. "Spars are becoming the deep-water facility of choice."

Parker said the independent's use of the Spar plays to its strengths, allowing the non-majors to compete by pursuing medium-sized accumulations while the majors seek the elephants.

"In some parts of deepwater, independents have become the dominant player in activity," he said.