Gulf of Mexico

Michael Crowden Houston Factors responsible for the surprising strength in drilling activity

Michael Crowden
  • Factors responsible for the surprising strength in drilling activity in the Gulf of Mexico during 1994 should continue to propel drilling in 1995, says John Ryan, chief executive of Global Marine Drilling. "For the past several years, natural gas prices have been a reliable predictor of offshore drilling activity in the Gulf of Mexico," he said. "But for most of 1994, drilling levels remained high despite falling agas prices. We believe there are fundamental changes in the economics of drilling in the Gulf that have made drilling for ga profitable for producers, even at these lower gas prices." SOURCE: Global Marine Inc.

Lightering seen as solution to OPA 90 offloading problem

The Coast Guard is proposing to designate three lightering zones in the Gulf of Mexico to allow lightering of oil from large tankers onto smaller tankers for delivery ashore. the zones will be at least 60 miles offshore. Weather, sea-state, and other restrictions are also proposed for lightering operations within the zones.

While any vessel may use the proposed zones, single-hull tank vessels, otherwise banned by the Oil Pollution Act of 1990, will be allowed to off-load only within the proposed zones or at a deepwater port. The only deepwater in the US is the Louisiana Offshore Oil Port (LOOP).

All single hull tank vessels of 5,000 gross tons or more will be banned from operating in US waters, including lightering zones and deepwater ports, on 1 January 2015. The proposed designation will not affect fishing, recreational or other legitimate uses of the water within the zones.

The Coast Guard also proposes to designate three areas containing underwater seamounts, including the ecologically sensitive Flower Garden Banks National Marine Sanctuary, where all lightering will be prohibited; to incorporate the use of recognized industry guidelines; and to require compliance with US work hour limitations for tanker crews.

Senators offer stimulus package for offshore

Senators Bennett Johnston and John Breaux, both Democrats from Louisiana, have introduced separate legislative initiative designed to stimulate opportunities for the oil and gas industry in the Gulf of Mexico.

  • Johnston's legislation allows producers to forego royalty payments on deepwater oil and gas production in the gulf until a certain amount of production is reached. The legislation covers leases coming into production as well as production from new development activities on existing leases.

    The bill also seeks a royalty holiday for developments having reserves of at least 17.5 million bbl of oil equivalent in water depths of 200 to 400 meters, 52.5 million bbl in depths of 400 to 800 meters, and 87.5 million bbl in water depths of more than 800 meters.

    Currently, the Interior Secretary may grant relief once a lease is producing, but it is unclear whether or not the authority exists prior to production.

  • Breaux's legislation provides direct deepwater production incentives. Breaux's bill offers a US$5/bbl production tax credit for oil and gas produced in deepwater. The Breaux bill also provides incentives for marginal production in the form of a production tax credit. And, Breaux proposes to allow producers a tax deduction for use of state-of-the-art geological technology.

ANR rejuvenates geologically complex field

Coastal said its subsidiary, ANR Production, has successfully rejuvenated a geologically complex field located offshore Louisiana - West Cameron 504A. The field had been producing about 3.5 million cu ft/day of gas in recent years. After evaluating 3D seismic data, completing two major workovers, and drilling three new wells, ANR increased deliverability to more than 30 million cu ft/day.

"Completion of phase one of this project marks the successful beginning of our reemphasis on exploration and production in the Gulf," said David A. Arledge, president and chief operating officer of Coastal. "Once we have established sufficient production history from phase one, we will proceed in the second quarter of 1995 with phase two, expected to enhance production further." The West Cameron 504A Field was discovered in 1971, but not placed on production until 1980 because of the complex nature of the geological structure. the field is heavily faulted, with multiple pay zones between 4,500 and 7,000 ft at a water depth of 150 ft.

News briefs

  • Pogo Producing has initiated natural gas production from Ship Shoal 240/256 at a gross daily rate of 35 million cu ft/day. Partners include PGC and Petrobras America. The production is via three new platforms installed in the field in October 1994. This successful exploration activity at Ship Shoal 240/256 established another high-quality field for the company and increases Pogo's current company-wide daily natural gas production to 142.5 million cu ft of gas. Our daily production of natural gas is up 60% from this time last year," said Pogo chairman Paul G Van Wagenen.
  • PANACO says it has acquired an additional 9,200 acres in West Delta 58 and adjacent state waters, bringing its inventory in the area to over 14,300 acres. The sellers were Conoco, Vastar, Texaco, and Oxy USA. Terms weren't disclosed. PANACO is farming out the northern half of West Delta 58 to Dalen Resources Oil and Gas, retaining a 12.5% overriding interest. Dalen is to conduct a 3D seismic survey and drill a well to a target at approximately 16,500 ft.
  • United Meridian Corp (UMC) says a production platform is scheduled to be installed in the second quarter 1995 at South Marsh Island 80, where UMC owns 50% working interest. The discovery well encountered 136 ft of net pay. Production casing was set to a total depth of 11,900 ft. The well was temporarily abandoned without testing. Additional drilling will follow platform installation.
  • Peak daily production of 100 million cu ft of gas and 10,000 bbl of oil and condensate is expected in February from East Cameron 331/332 Field, says operator Noble Affiliates (Samedan). Noble has completed nine wells from the platform since installing the production deck on a four-pile, 21-slot drilling jacket during the third quarter 1994. Noble owns a 70.4% drilling interest.
  • Under contract to Shell Offshore, Sonsub recently provided a mock-up ROV with a seven-function manipulator, HPU, cameras, and video suite. Leased to Shell, the equipment was used to perform initial and extended factory acceptance tests on subsea hardware bound for Shell's deepwater Popeye installation. The simulated underwater analysis was performed on the umbilical termination. The ROV's manipulator performed test with a hot stab, torque tools, and mission-specific packages.

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