GoM drilling forecast calls for flat 2010
Jim Dodson, Ted Dodson - James K. Dodson Co.
David Paganie - Managing Editor
Drilling in the US Gulf of Mexico continued to decline in 2009 and is forecast to be flat this year; however, activity has been steady in deepwater, notably in water depths of greater than 3,000 ft (914 m). Operators in 2009 announced 13 deepwater discoveries, 10 of which are in greater than 3,000 ft of water and on pace with the previous two years. The 2009 deepwater discoveries, announced through end-November, represent nearly 1.4 Bboe, the most found in a single year in the GoM since 2002, according to Wood Mackenzie. One discovery, BP-operated Tiber, is estimated by Wood Mackenzie to hold about 600 MMboe of recoverable reserves, ranking it as one of the largest deepwater fields in the GoM.
Meanwhile, Gulf production continues to rise with the addition of new production from deepwater and volumes coming back online that were previously shut-in from hurricane activity. Shelf production is expected to continue declining while deepwater output is forecast to peak in 2011 at about 2 MMboe/d, representing 73% of all production from the Gulf, according to Wood Mackenzie. Deepwater production, as a percentage of overall GoM output, is estimated to climb to 80% in 2015.
Benchmark
The last benchmark year for drilling in the US GoM was 2006. That year, 934 wells were planned, 648 were permitted, and 672 were drilled. The count has fallen in all three well categories each year through October 2009, with a significant drop noted after 2008, driven by reduced capital expenditures. The number of wells drilled in 2009 was 330, down 34% from 2008 and 51% from 2006. This is the lowest level recorded since 1960. Planned wells in 2009 fell 48% from the previous year to 371, and down 61% from 2006. The total number of wells permitted in 2009 was 261, down 48% from 2008 and 60% from 2006.
In 2009 through October, 39 operators drilled 177 wells in less than or equal to 600 ft (183 m) water depth. Chevron drilled the most wells in this water depth range with 21, followed by Apache with 12, and Ankor Energy with 11. In greater than 600 ft (183 m) of water to less than or equal to 3,000 ft (914 m), 11 operators drilled 19 wells. Marathon and Newfield are at the top of the list with three well spuds each. In greater than 3,000 ft water depth, 18 operators drilled 71 wells. BP ranks at the top of this category with 13 wells drilled, followed by Shell with 11, and Anadarko with 10. For all water depths in 2009, Chevron is first with 29 wells drilled, followed by BP with 14, and Mariner and Shell with 13 each. This rate of drilling marginalizes the US GoM, perhaps to be reloaded by the deepwater discoveries listed in the associated table.
Federal OCS - US Gulf of Mexico Wells Permitted 2006 - 2009/10 YTD By year - water depth range
In looking at wells drilled in 2009 by area, the highest number recorded was 34 in Green Canyon, followed by 26 in South Timbalier, 25 in Mississippi Canyon, and 21 in Eugene Island.
Federal OCS - US Gulf of Mexico Wells Drilled 2006 - 2009/10 YTD By year drilled - water depth ranges
Forecast
The forecast for 2010 calls for 330 wells to be drilled in the US GoM. This is based on well permits and plans filed with MMS. Drilling on the shelf is estimated to total 218 wells (88 exploration and 130 development), down 44% from 2008 and 60% from 2006. In water depths of greater than 600 ft (183 m) to less than or equal to 3,000 ft, 24 wells (12 exploration and 12 development) are expected to be drilled, down 20% from 2008 and 51% from 2006. In greater than 3,000 ft (914 m) water depth, 88 wells (60 exploration and 28 development) are forecasted, on trend since 2006. This water depth category also has the highest number of undrilled leases and the greatest amount of acreage held in its primary term.
Lease inventory
The inventory of undrilled exploration leases held in its primary term totals 4,764, down about 1,000 from 2006. There are 940 undrilled leases on the shelf due to expire by 2014. In the greater than 600 ft (183 m) to greater than or equal to 3,000 ft (914 m) water depth range, 522 leases are undrilled and scheduled to expire by 2019. There are 3,302 undrilled leases in greater than 3,000 ft (914 m) water depth, 41% of which are held by five majors and 59% by 41 independent operators.
Lease acreage on the shelf held in its primary term total 4.7 million, down 38% from 2006. Leased acreage held by production fell from 7.3 million in 2006 to 6.5 million in 2009, and leases held under plans of development slipped modestly in 2009. Leased acreage in its primary term in greater than 3,000 ft (914 m) water depth is 18.2 million, down slightly from 2006. Leases held by production total 1.5-million acres. One lease tract usually comprises about 5,000 acres.
Federal OCS - US Gulf of Mexico Primary Term Leases Undrilled By year expiring - water depth ranges
By operator, BP is the number one leaseholder in the GoM with 2.67-million acres, most held in its primary term. In a close second is Chevron with 2.61-million acres, followed by Anadarko with 2.01 million and Shell with 1.89 million. In greater than 3,000 ft (914 m) water depth, BP is the top acreage leaseholder with 2.24 million, followed by Anadarko with 1.69 million, Shell with 1.61 million, and Chevron with 1.54 million.
Leases are issued with expiring dates from five years, eight years, and 10 years, depending on water depth. In 2009, there were leases expiring on 1.9 million acres, down from 3.6 million in 2008 and 3.7 million in 2006. Leases relinquished before they expired, in other words turned back to MMS, amounted to 2.1 million acres in 2009. This is the largest sum since 1.6 million acres were relinquished in 2006.