May 1, 2001
Beacon Energy said a field-by-field study of natural gas production in the Gulf of Mexico shows a 10.2% decline over 18 months.

Jennifer Pallanich Hull

Study: Gulf gas output slips 10% in 18 months

Beacon Energy said a field-by-field study of natural gas production in the Gulf of Mexico shows a 10.2% decline over 18 months. Beacon Energy is a Washington-based consulting firm specializing in analysis, assessment, planning, and project development.

Production from the federal waters of the Gulf declined to 12.7 Bcf/d from 14.1 Bcf/d between January 1999 and June 2000, the latest month for which reliable data is available. The Gulf of Mexico provides up to 25% of the natural gas consumed in the US.

The decline "explains, in part, the run-up in gas prices during the last half of 2000," said Jeff Brown, vice president of Beacon Energy. "Combined with high gas-fired generation demand during the unseasonably warm summer weather in California and the heating demand in November and December 2000 throughout the country, the coldest two-month period in more than a century, one can see why we have experienced extremely high price levels in the gas market."

Since then, the level of drilling activity, a leading indicator of gas production, has increased significantly, and gas production based on the Energy Information Administration's recent numbers show a 10% increase in December 2000.

Doughnut Hole update

The US Mineral Management Service is preparing for its August sale, where it may finally offer drilling leases in the once hotly disputed "Doughnut Hole" area in the Gulf of Mexico. The rights to the 11,000 square-mile area were mostly settled by a treaty signed last June by former President Clinton and former Mexican President Ernesto Zedillo.

BP assigns 5-year agreement for risers, wellheads, trees

BP awarded ABB with a frame agreement to supply the well systems for drilling and production operations for the dry completion unit deepwater development program. The five-year agreement includes options to extend the work to a decade. The $250 million first phase represents the largest single contract for ABB Vetco Gray, which is supplying the equipment. Hardware will include subsea wellhead equipment and tieback connectors, drilling and production risers, tensioners, and surface wellheads and trees for BP's program. The equipment will be manufactured in Houston.

Unocal expanding deepwater wildcatting

While Unocal has strong deepwater leaseholds in other regions of the world, such as Indonesia and Brazil, the company is finally expanding its deepwater exploration operations in the Gulf of Mexico. "We are going out to true wildcat area," said Ken Bayne, Unocal's deepwater development manager for engineering and construction.

Unocal drilled a well at the Ponza field in Keathley Canyon 774 in 6,736 ft water depth in March, and Bayne said the company has quite a bit of work lined up in the area, including some partner-operated wells.

"We are going out to more unexplored areas," he said, noting Unocal is headed for many areas deeper than 6,000 ft water depth. The equipment and technology are there, he said. "The systems still have room for greater water depths."

Unocal is also focusing on speeding up its drilling rate. Bayne said the company is drilling wells in 50 days that others have taken 200 days to drill. "I wouldn't say they're cutting corners or drilling unsafely. They're very safe," he said, adding the company is setting and achieving its drill-time goals.

Cal Dive, Horizon renewing alliance

Cal Dive International Inc. and Horizon Offshore Inc. renewed their alliance agreement on operations in the Gulf of Mexico through Feb. 29, 2004. Under the agreement, Cal Dive will provide dive support vessel services behind Horizon pipelay barges, while Horizon supplies pipelay and derrick barge services to Cal Dive. Under the updated plan, Cal Dive will also provide diving personnel working on Horizon barges, which Horizon had previously handled. The initial agreement was signed three years ago.

More Canyon Express contracts

Elf Exploration awarded Saipem an $82 million contract for the Canyon Express project. Of this, Australian engineering contractor, Clough, will participate in a $24 million subcontract for the deepwater project in the Gulf of Mexico. Sonsub-Clough was subcontracted to install the umbilicals and procure and install a small diameter flowline in the Canyon Express project.

"Undertaking this sort of installation to a depth of 2.2 km is a world record. It's never been done before," said Brian Hewitt, Clough Ltd. managing director. Joint venture group subsidiary Sonsub-Clough will use the Maxita. The vessel's 120-day project commission includes collecting the umbilicals in Norway, transiting to Houston, and 80 days onsite in the Gulf of Mexico. Further widening the international scope of the project, all engineering work will occur at Sonsub-Clough's Aberdeen office in Scotland.

Mustang Island project in production

Vector Energy Corp. said production from its Mustang Island 818-L project was to begin by May. Since December, the company has completed all downhole work on the five wells expected to go into production in the first phase of the project.

Vector has also completed work affiliated with new production facilities. "While we are very pleased with the progress so far, we are anxious to commence production from this project. Production from Mustang Island field could easily exceed all other production over time," said Sam Skipper, Vector's CEO.

Remington updates Gulf plans

Remington Oil and Gas Corp. has contracted a rig to drill eight exploratory wells during the year: 58%-owned Eugene Island 302 No. 1, 20%-owned West Cameron 170 No. A-7, 58%-owned South Marsh Island 93 No. 1, 50%-owned South Timbalier 214 No. 1, 58%-owned East Cameron 179 No. 1, 33%-owned South Timbalier 214 No. 2, 42%-owned West Cameron 170 No. B-2, and 58%-owned East Cameron 298 No. 1.

Remington said it reached total depth of 14,630 ft at the South Marsh Island 35 exploratory well and discovered 35 ft net oil and gas in the primary objective Rob E sand. The well is being completed for production, and is expected to begin in the third quarter. Remington operates the discovery with 62.5%, and Magnum Hunter Resources owns 37.5%.

Drilling operations continue at the company's 42%-owned West Cameron 170 No. 4 exploratory well. This well was expected to reach total depth by the end of March. Follow-ing operations on the No. 4 well, two additional wells were to be drilled on the property this year.

Pogo well finds pay

Pogo Producing Co.'s Main Pass 61 No. 2 exploratory well, drilled to a total depth of 11,424 ft, discovered 91 ft of pay. An upcoming exploratory well will test another structure about three miles southwest of the well. A four-pile, 12-slot jacket is under construction and is planned for installation in the second quarter at the Main Pass 61 No. 1 discovery well. A 20,000 b/d-capacity production facility will be installed by November. First production is planned by year-end. Pogo has 100% interest in the well and the field.

Also, the company said the Ewing Bank 871 No. 4 well found pay below 10,000 ft, and a zone below 11,000 ft is under evaluation. First production is expected this year. Operator Walter Oil & Gas has 40%, Pogo has 50%, and Continental Land & Fur has 10%.