Gulf of Mexico

July 1, 2000
The approval of floating production, storage, and offloading (FPSO) vessels in the Gulf of Mexico appears to be a forgone conclusion.

Future of FPSOs in the Gulf of Mexico

An FPSO for the Gulf of Mexico, such as this one being installed off Brazil, would likely be double hulled and contain other safety or environmental measures.
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The approval of floating production, storage, and offloading (FPSO) vessels in the Gulf of Mexico appears to be a forgone conclusion. The only question now is what the requirements will be for construction, deployment, and operation of the vessels.

Government due diligence committees, sometimes with Gulf of Mexico producers in consultation, continue to define and work out the issues and technical details, including the extent of double hulling, risks, capacity and transfer issues, safety issues, standards in design, and environmental. The US Minerals Management Service could approve the use of FPSO vessels in the Gulf of Mexico as early as February of 2001. Carolita Kallaur, associate MMS director, explained that "FPSOs present a different set of risks" than pipelines, and the "introduction of any new technology presents a certain amount of risk."

The MMS and Coast Guard (USCG) must set requirements if FPSOs are approved, and areas of concern ranged from the OPA 90 double-hull requirement to whether an FPSO would always be considered a vessel or, as in the UK and other areas, if it would be considered a vessel when enroute to a location and an offshore installation at all other times. The current USCG interpretation is that FPSOs are vessels.

"I believe the appropriate regulatory framework (for FPSOs) already exists," said US Coast Guard Captain Gordon Marsh. Whether foreign flag FPSOs would be allowed has yet to be determined, he said, but the FPSOs would still be bound by the same regulations of US flag FPSOs. And, said USCG Lt. Commander Russell Proctor, employment on any FPSO would still be subject to citizenship regulations similar to those of other foreign flagged vessels.

"There are still a lot of unanswered questions here," Marsh said. James Regg of the MMS said flaring would not be allowed. Phil Wilbourn of the Offshore Technology Research Center (Texas A&M) said, "It looks to me that bringing in FPSOs to the Gulf of Mexico is a lot less risk than what we've got now."

Discovery near Gunnison in Garden Banks

Partners in the Gunnison prospect announced an oil discovery on Garden Banks 668 in the deepwater Gulf of Mexico. The 17,000-ft TD discovery well, located in 3,150 ft water depth, encountered about 275 ft of net hydrocarbon pay in three main zones. The Noble Amos Runner drilled the well and is now drilling a downdip appraisal sidetrack to explore the aerial extent of the reservoir. Additional appraisals are being considered to further delineate the Gunnison discovery.

"We view the deepwater Gulf as a prime growth area and plan to drill another 10-12 of our high quality prospects over the next two years," said CanadianOxy President and CEO Vic Zaleschuk. Partners in the Gunnison sub-basin on Garden Banks 667, Garden Banks 668, and Garden Banks 669 are operator Kerr-McGee with 50%, CanadianOxy with 30%, and Cal Dive International with 20%.

R&B Falcon re-activating shallow water rig fleet

R&B Falcon announced that six of its shallow water jackups and three of its drill barges will re-enter active service soon. To allow for crewing and final preparation for service, the activations are scheduled for the second and third quarters. Of the nine, three have firm contracts, four have contracts under negotiation, and two are in preliminary discussion stages of with operators. The units are being reintroduced to service based on the continued demand for drilling for natural gas in the Gulf of Mexico, the company said.

Chevron to install two platforms

Horizon Offshore won a Chevron USA Production contract for the installation of two production platforms and the lay and bury of multiple pipelines in the Gulf of Mexico. Horizon will use the derrick barge Pacific Horizon for the platform installations and its pipelay-bury barge Brazos Horizon to install the pipelines. The project is scheduled for completion during the third quarter of 2000.

Decision near on gas project

The US federal government is expected to decide by summer's end whether to allow development of a natural gas field off Florida's west coast. Parties involved say US Commerce Secretary William Daley could decide soon whether to overrule Florida's effort to halt Chevron and its partners from developing the Destin Dome gas field. Florida officials worry the project will negatively affect the state's top business sector - tourism. Bans on offshore leasing prevent the US government from granting drilling rights closer than 100 miles to Florida's coast, but Chevron and other companies held leases before the drilling moratoria took effect.

Bollinger purchasing repair unit

Friede Goldman Halter said it has signed an agreement to sell its vessel repair unit to Louisiana-based Bollinger Shipyards for $80 million. The all-cash transaction, which is expected to be complete this month, is structured as an asset sale and is subject to certain conditions. The vessel repair business' five facilities are in Louisiana and Texas.

Agip joins Texaco in exploration

Agip Petroleum and Texaco signed a Gulf of Mexico exploration agreement covering 60 deepwater blocks ranging from 1,000 meters to 3,000 meters. Under the deepwater exploration venture, Agip will be assigned working interests, ranging from 12.5% to 25%, in leases covering the various blocks.

Newfield has two successful wells

Newfield Exploration said it drilled two successful wells at Ship Shoal 139. The Ship Shoal 139 No. 1 well encountered 287 ft of net hydrocarbon pay. The Ship Shoal 139 No. 2 offset well found 133 ft of net hydrocarbon pay. Operator Newfield owns an 82.5% working interest in both discoveries, and Fidelity owns 17.5%.

The South Timbalier 107 No. 2 well found 144 ft of net gas pay. The partners plan to set a platform over the well with first production expected in by early 2001. Operator Newfield has a 30% working interest, Basin Exploration has 30%, Cheyenne has 20%, and Fidelity has 20%.

Through a farm-in agreement, Newfield acquired a 50% working interest in Grand Isle 103. Newfield successfully sidetracked an existing well and encountered 30 ft of net gas pay. Newfield has 48.5%, Fidelity has 10.3%, Westport has 20.5%, Continental Land and Fur has 13.7%, and Case Pomeroy has 7%. Newfield recently drilled a dry hole on a wildcat prospect - Wambenger - located on license area WA 273-P. Newfield operated the prospect with a 70% interest.

Black Widow to be tied back to Morpeth

Wellstream, a division of Halliburton's Brown & Root Energy Services, won contracts from Mariner Energy and Kerr-McGee for flexible risers and flowlines for subsea tie-back projects in the Gulf of Mexico. The contract from Mariner is to Black Widow, being developed as a single well subsea tieback to British-Borneo's Morpeth mini-tension leg platform. The Kerr-McGee contract is for the dual subsea tieback of Viosca Knoll 826 No. 12 well to the Neptune spar. ;