Bruce Beaubouef • Houston
The deepwater Gulf of Mexico is experiencing a strong resurgence of E&P activity and is well on its way toward reaching a "new equilibrium" in 2013, according to Wood Mackenzie's latest upstream outlook.
Huge exploration success in the deepwater GoM over the 10 years preceding the Macondo incident built a momentum that has been slowed, but not diminished in the two years succeeding it. The outlook emphasizes the point that the Gulf is being defined by a high level of investment, a wide range of opportunities, and a large number of explorers.
"The moratorium and exodus of several mobile offshore drilling units from deepwater GoM in 2010 sharply hindered drilling activity through 2011, but it has rebounded very well in 2012," said Lauren Payne, GoM Analyst for Upstream Research at Wood Mackenzie. "We expect this trend to continue, driven primarily by development drilling as operators seek to boost production levels and bring new projects onstream."
The firm emphasizes that over $20 billion will be spent drilling development wells for onstream projects alone through 2015. Subsea and facility spend will become bigger drivers as new projects like Jack/St. Malo and Hadrian move forward in development. Together, these two categories represent $27 billion spent through 2015. "Production has suffered in part because the low drilling levels in 2010/2011 could not mitigate natural decline, but we expect regional production to exceed 2009's peak in 2018/2019 at 2 MMboe/d," Payne added.
For explorers, the deepwater GoM remains an attractive region, one that is expected to remain a vibrant hub of activity over the long term. "We expect more than $70 billion to be spent on exploration in the region by 2030, more than all the other key deepwater provinces combined," noted Julie Wilson, Senior Analyst for Wood Mackenzie's Exploration Service. From that investment, over 12 Bboe is expected to be found by 2030, creating around $30 billion of value.
What sets the GoM apart and drives this high level of investment, says Wood Mackenzie, is the wide range of opportunities available and the large number of explorers. There are 46 operators in the deepwater in GoM, compared to just 15 in Angola/Brazil. "Opportunities in this region range from small, low-risk prospects to giant targets in extreme conditions," explained Wilson. "Abundant infrastructure and an open, competitive environment allow smaller companies to create value from the more mature plays. Larger companies exploring for giant volumes must contend with remote, ultra-deepwaters and reservoirs that are buried to extreme depths below thick salt layers that impede seismic imaging."
Helping this wide array of operators, Wood Mackenzie notes, is an above-ground environment that is still considered to be among the most attractive in the world, despite a changed regulatory environment that undoubtedly has created some uncertainties.
Meanwhile, ample unused processing capacity in deepwater GoM could create significant value for hub owners and satellite operators alike if the right terms can be agreed. "By 2017, up to 70% of deepwater GoM processing capacity will remain unused, although the available amount will be smaller due to technical and operational reasons," explained Norm Pokutylowicz, Analyst for Upstream Research at Wood Mackenzie. "Demand for it will come in the form of infill development and tiebacks, while value will be derived either by operators monetizing their discovered resources or in the form of tariffs from third-party tiebacks."
According to the firm, an additional 2 Bboe of reserves are expected to be produced by subsea tiebacks from fields under development; probable developments; and those yet to be discovered by 2017. By then, new third-party tiebacks are also expected to generate each year an extra $200 million in tariffs.
In summary, Wood Mackenzie expects that deepwater GoM will remain an attractive region and will be a vibrant hub in the long term, with more than $70 billion to be spent on exploration in the region by 2030, more than all the other key deepwater provinces combined, creating around $30 billion of value. Nonetheless, the firm notes that there are still obstacles to achieving this outlook: capital, equipment, and personnel constraints in GoM and globally will affect project prioritization. "The recent lack of exploration drilling will impact long-term reserves replacement," Payne added. "In addition, the high-profile Paleogene play still faces substantial technological risks, in an ultra-deepwater environment with very poor reservoir qualities." That being said, Payne added, "we are well on our way to achieving this 'new equilibrium' in GoM in 2013 and the future of GoM from there is very bright."
Energy XXI, Exxon Mobil form joint venture
Energy XXI has agreed to acquire some of Exxon Mobil Corp.'s shallow water Gulf of Mexico interests. The agreement covers 5,000 gross acres (20 sq km) on Vermillion block 164.
Further, Energy XXI and ExxonMobil have agreed to jointly explore nine contiguous blocks adjacent to Vermillion 164. The joint venture is named Pendragon and is expected to be active by year's end.
Energy XXI also says its Big Sky 2 horizontal well at West Delta 73 reached 8,000 ft TVD/10,765 ft MD (2,438 m/3,281 m, respectively) and went onto production at 3,000 b/d of oil. The company is now drilling a second horizontal well on West Delta.
Technip gets Dalmatian subsea tieback
Murphy Exploration & Production Co. – USA has awarded Technip a lump-sum contract to develop the Dalmatian field in the Gulf of Mexico's De Soto Canyon blocks 4, 47, 48, and 91. Dalmatian, in water depths of 530 m to 1,800 m (1,739 ft to 4,921 ft), is jointly held by Murphy and Ecopetrol America Inc.
The project is a subsea tieback to an existing platform and the contract covers project management, engineering, fabrication, and installation of a gas riser, an oil riser, a 38-km flowline, and a 34-km pipe-in-pipe flowline with associated PLETs and jumpers, installation of a main subsea control umbilical, infield umbilical, and associated foundation and flying leads, and pre-commissioning.
Technip in Houston will perform project management, and the flowlines and risers will be made up at the spoolbase in Mobile, Alabama. Installation is scheduled to be complete in 2013 and will use theDeep Blue deepwater pipelay vessel, the Pioneer which came with the Global Industries acquisition, and the HOS Iron Horse multi-service vessel.
TDW completes subsea pipeline pressure isolation
TDW Offshore Services has successfully completed a subsea pipeline pressure isolation operation in the Gulf of Mexico. Carried out at a depth of 370 ft (113 m) against 870 psig, this isolation enabled the safe and effective tie-in of a piggable wye to the Mississippi Canyon Gas Pipeline, a 30-in. natural gas line running between the West Delta 143 platform and the Venice gas plant in Louisiana.
Mexico announces new deepwater discovery
Petróleos Mexicanos (Pemex) has discovered a potential new oil field in the deepwater Gulf of Mexico, said Mexico's President Felipe Calderón. The Supremus 1 well, 250 km (155 mi) offshore Tamaulipas in 2,900 m (9,514 ft) water depth, was drilled to 1,100 m (3,609 ft) below the seafloor.
The well is less than 40 km (25 mi) away from the international maritime boundary between Mexico and the United States. Calderón said Pemex hopes to confirm new 3P reserves between 75 and 125 MMbbl of oil. If confirmed, Pemex will have doubled its current proven reserves when coupled with the recent Trion 1 discovery.