Operators gear up for Gulf operations
Bruce Beaubouef
Managing Editor
The Gulf of Mexico remains North America’s leading oil and gas producing province, even despite the recent moratorium on exploratory drilling. While the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) has released new rules and guidance on offshore operations, production is continuing or is set to start in several fields, and operators have awarded a number of engineering and installation contracts in recent months to advance these projects.
At the same time, over the past few weeks BOEMRE has been slowly but surely issuing new permits to drill, allowing operators and contractors to renew drilling programs suspended by the moratorium, and begin work on new projects as well (for more on the recently issued permits, see the Gulf of Mexico column on page 18).
Operators also continue to make deals with other offshore players to acquire or divest various GoM interests, depending on the nature of the producing areas and their particular corporate strategies. For example, Shell recently agreed to sell its interest in six GoM oil and gas fields to W&T Energy VI LLC for $450 million, as part of an ongoing portfolio restructuring. The divested fields are Tahoe, Southeast Tahoe, Droshky, Marlin and Dorado, and a GoM producing shelf property, and are predominately mature gas fields. Shell continues to make significant investments in the deepwater Gulf, where the company currently produces some 230,000 boe/d. Perdido, the most recent addition to the Shell deepwater portfolio, began production last year.
Shell also says it has made a final investment decision on the 100,000 boe/d Mars B deepwater development; and the company has also recently announced the potential for two new 100,000 boe/d deepwater production hubs at the Appomattox and Vito fields following successful exploration and appraisal work on those prospects.
There have been other notable deals too. Energy XXI says it has bought certain shallow water GoM interests from ExxonMobil for $1.01 billion. The properties include nine fields generally located between Energy XXI’s existing South Timbalier and Main Pass operations in water depths of 470 ft (143 m) or less. The properties produce approximately 20,000 net boe/d, about 53% of which is oil. Offshore leases included in the purchase total 130,853 net acres.
Reserve estimates for the acquired properties were prepared on Nov. 16, 2010, by Netherland, Sewell & Associates, Inc., independent oil and gas consultants employed by Energy XXI. The properties are estimated to contain net proved and probable reserves of 66 MMboe, 61% of which is oil. Proved reserves are estimated at 30.1 MMbbl of oil and 116.1 Bcf of natural gas, or a total of 49.5 MMboe, 68% of which are proved developed. The deal is expected to enable Energy XXI to become the third-largest oil producer on the shelf, with interests in seven of the top 11 oil fields on the shelf.
Big Foot
Other GoM projects are moving forward as well. Chevron recently sanctioned development of its $4-billion Big Foot project, and it will be the company’s sixth operated facility in the deepwater GoM. It is located approximately 225 mi (360 km) south of New Orleans, Louisiana, in water depths of 5,200 ft (1,600 m). The development will use a dry tree extended tension leg platform with an on-board drilling rig and have production capacity of 75,000 bbl of oil and 25 MMcf of natural gas per day. First oil is anticipated in 2014. Chevron is the Big Foot field operator, and other working interest owners include but are not limited to Statoil Gulf of Mexico LLC.
Discovered in 2006, the Big Foot field lies in the Walker Ridge area and is estimated to contain total recoverable resources in excess of 200 MMboe. Primary pay sands are Middle to Upper Miocene ranging from 19,000 to 24,000 ft (5,800 to 7,300 m) and lie below a salt canopy ranging from 8,000 to 15,000 ft (2,400 to 4,500 m) thick. Three exploration and appraisal wells with multiple side tracks have been drilled safely and successfully in the field to define the Big Foot structure.
Discovered in 2006, Chevron’s Big Foot field lies in the Walker Ridge area and is estimated to contain total recoverable resources in excess of 200 MMboe.
Chevron has awarded at least two contracts to advance the project. 2H Offshore will undertake the detailed design and delivery management of the riser systems, and will be responsible for the detailed design and procurement management of the riser systems. These will comprise two high-pressure drilling risers, 15 production/water injection top tensioned risers (TTR), and oil and gas export steel catenary risers. The scope includes system integration, procurement services, and offshore installation support of the TTRs and export riser systems. Dril-Quip, Inc. says it has a contract to supply drilling equipment for the Big Foot TLP, including subsea wellhead equipment and specialty connectors and tubular.
Other projects
And, production is underway elsewhere in the Gulf. Apache Corp. reports that hydrocarbon production has begun at its Balboa field, located on East Breaks block 597. Initial gross flow rates have stabilized at approximately 30 MMcf/d of natural gas and 1,400 b/d of oil. Apache’s subsidiary is the operator of the field and holds a 50% working interest.
Balboa is located in estimated water depths of 3,350 ft approximately 130 mi south of Galveston, Texas. The field is a one-well development with a six-mile tieback to the Anadarko-operated Boomvang spar on East Breaks 643. The reservoir features oil-bearing sandstones with a natural gas cap. The well has been completed near the crest of the structure to optimize overall hydrocarbon recovery. This completion was designed to initially produce natural gas and liquids with increasing liquids and decreasing gas volumes throughout the life of the field. Apache assumed operatorship of Balboa with the acquisition of Mariner Energy in November 2010.
Work is getting underway on still other GoM projects. The Wood Group recently reported that its J P Kenny unit has been selected to perform detailed design for Amberjack Pipeline Co. LLC’s Jack/St. Malo deepwater oil export pipeline. Amberjack Pipeline is a joint venture between Chevron Pipe Line Co. and Shell Pipeline Co. LP. Chevron Pipe Line will construct and operate this pipeline for Amberjack. The one-year contract follows J P Kenny’s successful completion of the front-end engineering and design for the project. The approximately 136-mi. (219-km.), 24-in. (61 cm.) pipeline will originate in a water depth of 2,100 m (7,000 ft). It will start at the Chevron-operated Jack/St. Malo hub production facility in Walker Ridge block 718, approximately 280 mi (450 km) south of New Orleans, and connect to the Shell Boxer “A” fixed platform at Green Canyon block 19. The design will allow for technical challenges that include routing of the pipeline to minimize spans; design for pre- and post-installation vortex-induced vibration and stress spans; collapse testing of the pipe to verify wall thickness design; and installation of in-line valves and sleds.
Elsewhere, Chevron is moving forward with its Tahiti Phase II project. Subsea 7 has received a contract for subsea-to-surface engineering, construction, and services for Tahiti Phase II, and will install one 7.5-in. x 13,000 ft flexible riser; one 4-in. x 4,500 ft umbilical; five rigid well jumpers; 10 electrical flying leads (EFL); and seven steel flying leads. Subsea 7 also will transport the flexible riser from Le Trait, France, to the Gulf of Mexico for installation. The installation of the flexible and umbilical will take place 3Q, 2011 with the five well tie-ins occurring through to mid-2012.
Subsea 7 will use theSeven Oceans (pipelay) Skandi Neptune (construction/ flexlay), and the Ross Candies (light construction/IMR) vessels for the installation.
BOEMRE announcements
BOEMRE has called for nominations regarding a proposed oil and gas lease sale in the Gulf of Mexico Western and Central Planning Areas for the 2012-2017 Outer Continental Shelf Oil and Natural Gas Leasing Program. Nominations and comments concluded April 14, 2011.
The call was to “all interested parties” and aims “primarily to identify and evaluate areas with potential for oil and gas development, as well as determine possible environmental effects and potential conflicts in the Call area. This is in addition to the information collected through the National Environmental Policy Act (NEPA) review process.
BOEMRE says that comments will be used to develop lease terms and conditions to ensure safe offshore operations; and adds that comments will also be used to assess potential conflicts between offshore oil and gas exploration and development operations and state coastal management programs. The agency also says that the comments will be used to develop proposed actions and alternatives in the NEPA review process.
The agency has also released additional information about how to comply with the recently issued rules and previous guidance. The new publication addresses the Drilling Safety Rule (or Interim Final Rule), NTL-6 (including Worst Case Discharge calculations), and NTL-10, as well as further information on BOEMRE’s inspections of BOP testing, Oil Spill Response Plans (OSRP), and the manner in which environmental assessments will be conducted for deepwater drilling plans.
The actual publication is online athttp://www.boemre.gov/ooc/press/2010/press1213.htm.
Over-pressured wells study
A recently released study may be of interest to operators and contractors that work in the Gulf. In a work designed to evaluate and address exploration and production drilling risks associated with over-pressured formations, it was found that dramatically different magnitudes of overpressure existed across all 149 deepwater wells studied in the deepwater U.S. Gulf of Mexico Lower Tertiary Wilcox play. Understanding the variation and magnitude of overpressure is of critical importance, according to the authors of the study. The authors include officials from information and insight provider IHS and pressure consultants GeoPressure Technology Ltd. (GPT), an Ikon Science Co.
TheIHS/GPT Deep-Water Gulf of Mexico Lower Tertiary Wilcox Pressure Study sought to gain an understanding of overpressure in the deepwater Gulf in terms of its distribution and potential impacts on future exploration of the region’s petroleum system. The study examined 149 deepwater Gulf wells, which were extracted from the IHS Pressure Database, a global dataset of re-interpreted, quality controlled, sub-surface formation pressure data.
The study focuses on key wells in Alaminos Canyon, Keathley Canyon, Walker Ridge, Garden Banks, Green Canyon and Atwater Valley, a combined study area that spans offshore acreage covering hundreds of miles across offshore Texas, Louisiana and Mississippi in US federal waters. Water depths in the region range from 4,000 to 10,000 ft and the total depths of the wells can exceed 30,000 ft total vertical depth, subsea.
