Jan. 1, 2002
Applications to use floating production, storage, and offloading (FPSO) systems in the Gulf of Mexico will be accepted, the US Minerals Management Service said.

Jennifer Pallanich Hull, Houston

FPSOs heading to Gulf

Applications to use floating production, storage, and offloading (FPSO) systems in the Gulf of Mexico will be accepted, the US Minerals Management Service said. Leading up to the decision, the MMS released last February its final environmental impact study (EIS) on allowing FPSOs in the Gulf of Mexico and released its comparative risk analysis on using FPSOs in the Gulf. "While this programmatic level decision does not approve any specific FPSO site or project, it provides a foundation for considering a specific request by a company to use an FPSO for a project," said Acting Director Lucy Querques Denett.

Excluded from the decision is a 471-block area off the shelf from Galveston to New Orleans, which is in part of the US Coast Guard's lightering-prohibited area. The MMS said it will withhold decision on this area for two years while it and the USCG consider use of FPSOs in lightering-prohibited areas.

Slicing offshore turnover rates

In less than five years, Diamond Offshore took its offshore personnel turnover rate from a high of 69% down to the current 27%. All it took, according to Diamond Offshore Vice President of Human Resources Lynn Charles, was a new approach to training. Charles outlined his company's program during the IADC's Drilling Gulf of Mexico 2001 conference in Houston. Through exit interviews, he said, the company learned that many entry-level offshore employees had false expectations of what offshore life and work would be.

"They had no idea what they were getting into," he said. Diamond searched for a way to make sure those hired would be good fits for offshore work, finally settling on a training program that involved a one-week stint on the Mr. Charlie in Morgan City. The company chose those with no rig experience. "It was a little controversial at the time, but it turned out extremely well."

Diamond also implemented a method to keep employees on the books while other companies are laying off their workers. In the downturns, Charles said, the company has changed offshore work schedules from two weeks on, two weeks off to two weeks on, three weeks off. Workers initially complained about the smaller paychecks, he said, but they still had jobs and benefits. When the industry turned around, and the company reverted to its old schedule, "we got grumbling for having to go back to two and two."

Also, Carla Norris-Raynbird, a sociology advisor at Texas A&M University, told the conference group a number of factors were crucial in the offshore industry's high turnover:

  • Fear of being laid off and low wages
  • Limited opportunity to learn new skills
  • Inability to detach from home
  • Misconceptions of the offshore life
  • Physical and mental exhaustion
  • Boredom when not working.

In other employment comments at the conference, Lloyd Heinze, an associate petroleum engineering professor at Texas Tech University, said the industry needs to spin its aging work force as a way for the younger workers to "get promoted quickly."

Like the 1990s, or is it the 1970s?

Gas prices, rig counts, day rates, and the number of newbuilds will all increase as the industry climbs out of a downswing similar to the one that occurred in the 1970s, said Marshall Adkins, Managing Director at Raymond James & Associates. Addressing attendees at the Arthur Andersen New World of Energy symposium in Houston, he said those comparing the current downturn to 1998 would do better to compare it to the early 1970s when a price run-up ended in a recession. Technology is not keeping pace with the demands for deeper drilling or removing smaller reserves economically, he said.

"Technology is clearly working, but I don't think it's keeping up with the negative factors in our industry," Adkins said. And adding more rigs won't make much difference, he said, noting that tripling the number of rigs 25 years ago made almost no difference in production output. "At the end of the day, this decade is going to seem a heck of a lot more like the 1970s than anything we've seen in the last 20 years." To that end, he said, he expects the consolidated industry to be more cautious about committing to financing newbuilds.

Seafloor, current study released

The Minerals Management Service (MMS) released the "Re-analysis and Synthesis of Physical Oceanography Historical Data" study, which focuses on water depths exceeding 200 meters across the northern Gulf of Mexico. The MMS (US regulatory agency) said it is interested in the study, performed by Texas A&M Univ-ersity and the University of Colorado for the MMS, because of increased exploration for oil and gas along the continental slope and rise of the Gulf. This study lays the groundwork for further research into the movement of water at all depths. The MMS expects oil companies will use the data from the study to design structures that can withstand stronger currents at the lower depths.

Newfield reports discoveries

Newfield Exploration reported two discoveries in the Gulf of Mexico. Casing was run on the West Cameron 294 No. 5 wildcat well, where well logs encountered more than 100 ft of pay. Drilling operations were set to test deeper objectives. Operator Newfield has 85% working interest. Another prospect may be drilled near this discovery next year.

The Eugene Island 251 No. 5 well encountered over 120 ft of net gas pay in two sands. Planning for the fabrication of a jacket and deck is underway with first production expected in mid-2002. Operator Newfield has 57% working interest. Eugene Island 251 is in 160 ft water depth.

Pioneer has Ozona success

Pioneer Natural Resources said it had an oil discovery on the Ozona Deep prospect in the deepwater Gulf of Mexico and a successful appraisal well on the Stirrup discovery on the Gulf of Mexico shelf. The Ozona Deep discovery well was drilled in 3,280 ft water depth in Garden Banks 515 to 26,352 ft and encountered about 345 ft of net oil pay in two primary intervals. The well was logged, fluid samples were taken for analysis, and the well will be temporarily suspended without further testing. Appraisal plans for 2002 will be finalized following the analysis of the discovery well data. Pioneer has a 32% working interest and operator Marathon Oil Co. has a 68% working interest.

The Stirrup No. 2 appraisal well on Mustang Island 861, during the initial test of a second large fault block on the Stirrup structure, found three productive sequences in the middle Frio formation. The well was drilled to 18,091 ft, and production casing has been run and cemented. The discovery well was announced in July and temporarily suspended pending fabrication of facilities, which is underway. First production is expected in April 2002. Stirrup No. 2 has been temporarily suspended, and the third exploratory well is drilling to test a structural ridge adjacent to the two productive fault blocks tested to date. Pioneer has 25% in the 5,600-acre unit that includes the Stirrup field.

Discovery with Llano well

Enterprise Oil said it successfully drilled its first well as operator of the Llano field in Garden Banks 385 in the Gulf of Mexico. The Llano field, 125 miles offshore Louisiana, is in about 2,600 ft water depth and was discovered in 1997. The appraisal well, Garden Banks 385 No. 1, is the fourth well drilled on the discovery. The well encountered two high-quality hydrocarbon-bearing reservoirs with about 400 ft of total net pay. Production casing was set at a measured depth of 24,789 ft, and the well was suspended for future production.

"We will now progress our plans with co-venturers as quickly as possible to move Llano forward. We aim to complete the concept selection phase of work in the first half of 2002," John McGoldrick, President of Enterprise Oil Gulf of Mexico, said. Co-venturers are operator Enterprise with 27.5%, Amerada Hess with 27.5%, Mobil Producing Texas & New Mexico with 22.5%, and PanCanadian Energy Corp. with 22.5%.