This year’s annual Gulf of Mexico special report focuses on a number of trends - fewer deepwater wells, increasing activity by independents, declining production from shelf-based deep gas wells, deepwater interest from Pemex, and more.
Gulf of Mexico Editor Jaime Kammerzell wrote the bulk of the report. She opens with an analysis of deepwater activity and a survey of deepwater discoveries. The news is not all good. As she reports, “The number of deepwater discoveries in the US Gulf of Mexico continued a downward trend in 2004, dropping to 12 last year from 17 in 2003 and 21 in 2002.” Her analysis begins on page 24.
Meanwhile, more independents than supermajors are scoring big in the GoM deepwater. Of the 12 discoveries announced in 2004 - Atlas Northwest, Dawson Deep, Goldfinger, Front Runner North West, Jack, K2 North, Mississippi Canyon block 583, Puma, San Jacinto, Thunder Horse, Ticonderoga, and Tobago - independents drilled 10, while BP and ChevronTexaco logged one each.
To help understand the deep gas drilling picture, we called on noted consultantJames Dodson. His analysis, beginning on page 35, notes that production from wells drilled below 15,000 ft showed early promise, but has fallen significantly in recent years. After the US Minerals Management Service instituted deep-shelf royalty relief in 2001, Dodson notes, deep drilling and production began and rose to new heights the following year. “However,” he says, “since the peak in 2002, production from deep shelf wells has declined at a steady rate.” MMS data from January-May shows a 34% fall in oil and 25% drop in gas production.
“Shallow shelf production is in decline,” Dodson says, “and that decline is steadily increasing. Shelf oil production in 2003 is down 27% from 2000, and 2004 production is projected to drop 45% from 2000. Gas production in 2003 dropped 37%, and in 2004 is expected to be down 53% from 2000.”
In the Mexican side of the GoM, however, deepwater interest is on the rise. For the first time, the Mexican offshore oil and gas industry is looking at deepwater E&P as a top priority. Recently, Pemex confirmed its first deepwater discovery with the Nab-1 well in Campeche bay. Moreover, the company is actively looking for ways to get started in drilling through joint ventures or technology agreements in the Perdido fold belt, where deposits will most likely straddle the maritime boundary with the US. Recent political changes, both at the Energy ministry and in naming E&P man Luis Ramirez-Corzo to the director general’s position at Pemex, have brought deepwater issues to the forefront. Special correspondentDavid Shields brings us the latest thoughts, plans, and changes from Pemex, beginning on page 42.
Sand control is an ongoing issue. Sand control solutions translate into cost reductions and production increases. A team from BP’s upstream technology group has used data from over 200 sand control wells to develop a sound technique to determine safe production rates. Working with field data, the team developed a simple function of volumetric fluid flow per unit area of screen in units of velocity (flux). The function proved reliable at separating wells operating safely from those resulting in damaged screens or unacceptable amounts of produced sand.Drilling/Production Editor Frank Hartley discusses their work in his column, page 18.
