In the aftermath of Hurricane Ivan, the US Department of the Interior’s Minerals Management Service (MMS) has monitored the progress made by the oil and gas industry in returning to normal levels of operation in the Gulf of Mexico. About 196,222 b/d of oil and about 678.47 MMcf/d of gas remained shut in as of late November.
Shell Oil completed repairs to its Na Kika pipeline the last week of October, as expected. The pipeline sustained damage at two locations - near Main Pass block 151 under 210 ft of water and near Main Pass block 69 in 40 ft of water. Repairing Na Kika at Main Pass block 69 will allow BP to repair its MPOG line, which lies underneath the Shell line and sustained damage at the same location.
Na Kika’s pipeline capacity is 140,000 b/d. Before the hurricane, throughput was 122,000 b/d. Damage to pipelines leading to the Na Kika platform kept as much as 110,000 b/d shut in, even though the platform was ready for service
MMS Gulf of Mexico Regional Director Chris Oynes said, “While significant production from Gulf of Mexico facilities remains shut in due mostly to pipeline damage, there is a good likelihood that significant portions of this may be able to return to production in a few months.”
According to Oynes, BP and other GoM operators are looking at alternative oil and gas transportation, such as offloading production from a platform to a large tanker and then further offloading the production into shuttle tankers to take to delivery points onshore. This will help restore production ahead of pipeline repairs.
In the weeks following Hurricane Ivan, of the 4,000 structures and 33,000 mi of pipeline in the Gulf, the MMS estimates that 150 platforms and 10,000 mi of pipeline were in the direct path of Hurricane Ivan. A substantial amount of the deferred production is directly attributable to damage that occurred along pipeline routes rather than actual structural damage to the producing platforms. Pipelines in mud slide areas off the mouth of the Mississippi River experienced failures and will take a significant effort to locate and repair, because the pipelines are buried by as much as 20 to 30 ft of mud. Overall, Ivan damaged 12 large diameter pipelines in federal waters.
Two semisubmersibles head to Gulf
Thunder Horse semisubmersible arrived at the Kiewit Offshore Services yard in Ingleside, Texas, in late September for topsides installation and commissioning before it heads out to Mississippi Canyon blocks 778 and 822 after the New Year. The Thunder Horse field is in 6,050 ft of water. First oil is expected in 2005.
GlobalSantaFe’s newbuild ultra-deepwater semisubmersible drilling rig,GSF Development Driller I, is headed to the Gulf of Mexico to work for BHP Billiton Petroleum (Americas) Inc. The two-year multi-well exploration and development contract will start in April 2005.
Rigs in demand
As reported in the October column, day rates are continuing to move up in the Gulf of Mexico. Operators are drilling more now than they have in the recent past because of leases nearing expiration. According to Danny McNease, chairman and CEO, Rowan Companies, who spoke at the RMI Oilfield Breakfast Forum recently, about 1,280 leases will expire by 2007.
Oil and gas production is expected to decline in the next 10 years, McNease said. Meanwhile, field depletion rates and consumption rates are climbing. McNease anticipates GoM deep shelf and deepwater exploration to play a major role in reversing decline rates. His concern is that the worldwide jackup fleet, which works on the deep shelf, is aging. Only 4% of jackups are less than six years old, 79% are more than 20 years old, and by 2007, when the leases expire, 87% of the worldwide jackup fleet will be over 20 years old. He said there are only 12 newbuilds - nine jackups and three semisubmersibles - to meet the growing demand in the Gulf.
Other industry analysts echoed McNease’s concerns.
Jim Wicklund, Banc of America Securities, noted at the 7th Rice Global Forum in Houston, that 28% of US natural gas production comes from the shelf. In the 1940s, Wicklund said, field sizes were about 140 MMbbl. “Today we’d have to drill 14 times as many wells. I thought that was a good idea,” he said. “The idea that the GoM is going to have a resurgence and start catching up and meet US gas demand isn’t going to happen as well.”
However, the MMS reports that deepwater oil production has risen 386% since 1996 and accounts for 62% of the total oil production in the GoM. Deepwater gas production is up a dramatic 407% since 1996. Production from all water depths in the federal portion of the GoM totaled 562 MMbbl of oil and 4.44 tcf of gas in 2003.
