DEEPWATER OPERATORS IN 1997 amply padded their frontier exploration and development portfolios.
Virtually every nation with marine hydrocarbon potential was looking at its deepwateracreage.Technological advances and cost-cutting progress had pushed the deepwater frontier to within striking distance of 10,000 ft.
Perhaps the most significant influence on deepwater frontiers by any technology had been that of floating production systems (FPSs). A roundup of FPS technology advances in 1997 is covered in a companion article in this volume.
While the Gulf of Mexico accounted for the greatest numbers in terms of exploratory and development drilling in 1997, deepwater pioneer Brazil and new hot spot West Africa were vying with the U.S. gulf for bragging rights on expected deepwater production volumes. An overview of deepwater drilling and production advances in the Gulf of Mexico is included in an article on gulf activity elsewhere in this volume.
During 1993-97, about three fourths of all deepwater wells were drilled off the U.S. and Brazil, many of them development wells. While most of the deepwater drilling off West Africa was exploratory, the shift to development in that region was set to get under way.
Scarcely a week passed in 1997 that didn`t include mention of deepwater exploration rights being considered or awarded in such regions as eastern Canada, the Falkland Islands, West of Shetland, Norway, Ireland, Trinidad and Tobago, Egypt, South Africa, Australia, India, Pakistan, Bangladesh, Myanmar, CaspianSea,Philippines,Gabon, Malaysia, and Indonesia, among others.
The rationale is simple: The best prospects for elephant-class oil and gas discoveries worldwide lie in waters deeper than 200-500 m. (Deepwater definitions vary by company and country.)
During 1987-97, Exxon Corp. noted at the Offshore Technology Conference in Houston in 1997, about 2 million sq km of deepwater areas had been licensed or leased, and by 2000 about 10% of the world`s offshore production will come from deepwater fields.
The contribution of deepwater fields to the world`s oil production was expected to jump to about 3 million b/d by 2000 from about 1 million b/d in 1996.
Exxon noted that of about 700 hydrocarbon basins worldwide, less than half were producing, and about half of the 240 deepwater basins had never been tested.
Challenges
As the offshore industry approaches the millennium, new deepwater technology thresholds will be crossed.
The first drillships capable of drilling in 10,000 ft of water will be delivered in 1998. Off Brazil, state-owned petroleum company Petroleos Brasileiro SA in 1997 started production of oil in more than 5,600 ft of water, and that record was almost certain to topple in 1998.
The technological challenges of drilling and producing in water depths today appear less daunting than a more prosaic challenge: a lack of available equipment and skilled personnel.
For example, a shortage loomed in 1997 for anchor handlers that are big and powerful enough to handle the extra chain and wire rope for drilling in deeper water.
And while overall drilling rig utilization rates are bumping up against the newbuilding/replacement threshold, the tightest component of that rig fleet availability was for deepwater rigs and vessels. While Conoco Inc. and Reading & Bates in 1997 were jointly undertaking a billion-dollar program to develop an ultradeepwater drilling vessel exclusively for an exploration program in 7,500 ft of water in the Gulf of Mexico, many drilling contractors were feverishly refurbishing their rigs for work in deep and ultradeep waters. But industry was approaching the limit on rigs even available for upgrading, putting more pressure on contractors to commit to newbuildings.
Reading & Bates also planned to build a semisubmersible for contract to Shell Oil Co.`s U.S. deepwater unit for work in 10,000 ft of water in the Gulf of Mexico.
Deepwater licenses
During 1996-97, operators outside the Gulf of Mexico won more than 100 licenses in waters deeper than 1,500 ft.
Most of these were awarded off the U.K., Norway, and Ireland, with the greatest water depths for licenses off Northwest Europe reaching 7,200 ft, off Norway.
In West Africa, at least 15 licenses were awarded off Angola, Gabon, and Côte d`Ivoire during 1996-97. Deepwater acreage also was awarded during this period off the Republic of Congo, Namibia, Ghana, and South Africa.
Other areas expected to see deepwater drilling in 1998 because of recent license rounds included the Falkand Islands, Faeroe Islands, Australia, India, and Trinidad and Tobago.
The rush to license deepwater acreage was fueled by technology and cost-cutting, not overly bullish expectations for oil and gas prices.
That can illustrated in an historical perspective provided by Eloi Dolivo, Petroconsultants SA, Geneva. He noted that the number of deepwater and ultradeepwater wildcats tracked oil prices-given the expected lag time in data interpretation and rig availability-until 1992. Accordingly, the peak came at 1984-85, about 3 years past the oil price peak. But after 1993, the number of deepwater wells rose independently of the direction of oil prices, Dolivo contended, resulting from the falling costs for developing deepwater resources.
Geology played a role in that deepwater push as well, said Dolivo, as deepwater activity "emerged as a ground with its own plays (mainly gravity flows from the shelf) rather than being only the extension of plays proven on the shelf, the main game the majors chased in deep waters in the late 1970s-early 1980s."
An elaboration of that view underpins a notion that much of the interest off West Africa stems from a favorable comparison with Brazil`s deepwater Campos basin across the South Atlantic, according to Dolivo:
"Both sides of the Atlantic show the same tectonic events creating the same sedimentary patterns, in particular the Malembo mass flow deposits with an assigned Oligocene age in Angola, and the Carapebus `turbiditic` sands (in fact, many of them are deepwater fans) disseminated from the upper Cretaceous to the Miocene...the Carapebus hosts most of the Brazilian giant fields; in Angola, Shell`s Bengo find and Elf`s giant Girassol lie in the Malembo formation."
Angola
The most striking deepwater success off West Africa was Elf Aquitaine SA`s campaign off Angola.
Elf`s Girassol strike, discovered in more than 1,300 m of water on Angola`s Block 17 in April 1996, alone has reserves tentatively pegged at 1 billion bbl of oil.
It was, in 1997, the deepest water for a West African discovery and probably the largest offshore discovery in the region.
In mid-April 1997, Elf reported that its Girassol 2A appraisal well flowed at a combined rate of 18,000 b/d of oil from two reservoirs.
Elf said the second well also detected a new oil reservoir deeper than the discovery accumulation. The operator late in 1997 spudded a deviated well, designated Girassol 2B, from the same location to appraise the find.
Another step-out was scheduled to be drilled near the Girassol discovery, and a further new pool wildcat well was likely on the block.
Block 17 license partners are operator Elf 35%, Exxon Corp. 20%, BP Exploration 16.67%, Den norske stats oljeselskap AS (Statoil) 13.33%, Norsk Hydro AS 10%, and Fina SA 5%.
Republic of Congo
Another Elf unit was pressing a similarly ambitious program of deepwater exploration off the Republic of Congo.
Elf Congo increased its holdings there with the award of an exploration license for the Mer Tres Profonde Sud block, one of the last available permits for deepwater exploration off the Republic of Congo.
The 5,070 sq km permit area lies in 2,000-3,000 m of water, adjacent to Mer Profonde Sud, which was an extension of Haute Mer block, both operated by Elf.
The newer license is linked to a production-sharing contract with the Republic of Congo, into which Elf intended to bring other partners.
Elf planned two wells on the adjacent Mer Profonde Sud block, with the first scheduled to spud in 1998.
Elf Congo holds a 40% stake in this permit area; units of Royal Dutch/Shell Group and Exxon Corp. hold 30% each.
Elf Congo also is a participant in Mer Profonde Nord, operated by 40% shareholder Exxon; Elf Congo and Shell hold 30% each.
Plans called for a 3D seismic survey before drilling of one well on Mer Profonde Nord during 1998-99.
Gabon
Gabon in 1997 awarded its first ultradeepwater exploration permit, not far from the Elf Girassol strike.
Vanco Gabon Inc., a unit of Vanco Energy Co., Houston, signed a production-sharing contract (PSC) with the Gabon government for the Astrid Marin block (formerly Block K-97). The 1.2 million-acre block is 90 miles off Gabon in 8,200-9,900 ft of water.
Vanco claimed to be the first company to sign a PSC for an ultradeepwater prospect off Gabon and the first independent to acquire ultradeepwater rights in West Africa.
The acreage is located along the Gabonese border with the Republic of Congo, south of and adjacent to Vanco`s previously awarded 1.6 million-acre Anton Marin block.
Operator Vanco owns 100% interest in Astrid Marin block and a 90% interest in Anton Marin block with partner Reading & Bates Development Co., Houston, 10%. Reading & Bates had an option to increase its ownership to 20%.
Vanco reviewed existing 2D seismic data and planned an 870 line-mile 2D seismic survey on Astrid Marin block by yearend 1998.
First wells were to be drilled as soon as a drillship could be secured and placed under contract.
Egypt
In January 1997, Egyptian General Petroleum Corp. (EGPC) issued a tender for bids for acreage that included two offshore blocks in the Mediterranean Sea that are virgin territory and include water up to 2,000 m deep.
West Mediterranean Blocks A and B cover 21,600 and 15,600 sq km, respectively.
No wells had been drilled on these blocks, but EGPC acquired 275 line-km of 2D seismic data on Block A and 1,425 line km of seismic data on Block B.
EGPC was considering further specific studies on Blocks A and B. The company negotiated with PGS Exploration AS, Oslo, to conduct two speculative studies on its behalf.
"On Block A, we are planning a 2D seismic survey of the southern half of the area," said EGPC, "to enhance our knowledge of reef barriers there. On Block B, we are planning a 3D seismic survey over the eastern part of the area to confirm bright spots-which could be gas prospects-there."
South Africa
Soekor (Pty.) Ltd., Cape Town, identified what it described as "exciting" potential in the deepwater frontier off South Africa.
It focused on an unexplored area, the Southern Outeniqua basin.
Modeling of the adjacent Pletmos and Bredasdorp basins indicated good reservoir and source rocks. Large structures had been mapped within this untested basin, which covers about 20,000 sq km.
The Southern Outeniqua basin is situated off the south coast of South Africa within blocks 11 to 13. This basin consists of the southeastern deepwater extensions (beyond the 300 m isobath) of the Bredasdorp, Gamtoos/Algoa, and Pletmos basins.
A number of untested synrift dome structures were mapped on Blocks 11, 12, and 13, with postulated potential hydrocarbons of 300-1,600 million bbl of oil or 500-2,750 bscf of gas (excluding additional subcrop potential). The three blocks were available for sublease applications on a noncompetitive basis.
Brazil
Petrobras in mid-1997 started up production from the Marlim Sul (South) 3 well, a 1996 discovery in about 1,709 m (5,607 ft) of water in the Campos basin and in 1998 from its Roncador discovery in about 6,500 ft of water.
Petrobras claimed records for Marlim Sul 3 for deepest water completion/production, pipeline, risers, and host unit installation.
Antonio Carlos Agostini, director of exploration and production, said Petrobras foresees a need for 18 additional deepwater production systems in coming years.
Petrobras`s 1996-2000 Campos development program included plans for 210 subsea trees, 15 manifolds, 1,000 km of flexible lines and umbilicals, and 12 steel pipelines beyond what had already been installed in the basin.
Petrobras in 1997 also claimed two records for a tandem development in the Campos deepwater theater, involving start-up of giant Barracuda and Caratinga oil fields: deepest water for a floating production, storage, and offtake (FPSO) unit (840 m) and largest FPSO turret system (34 production lines).
In addition, Petrobras notched another deepwater record in 1997 when it installed a diverless, guidelineless tree (GLL) in 5,525 ft in Marlim Sul field development in the Campos basin. The ABB Vetco Gray unit was supplied to operator Petrobras for the MLS-3D well, in 5,554 ft of water. Officials in 1997 signed an agreement with Petrobras for development of horizontal trees for use in 8,200 ft of water as well.
Trinidad and Tobago
Spurred by important offshore discoveries of natural gas made since 1994, Trinidad and Tobago in 1997 was experiencing a major surge in exploration. Most of this activity was aimed at finding new gas deposits in deep waters off the northern and southeastern coasts of Trinidad.
Amoco Corp., Broken Hill Pty. Co. Ltd. (BHP), British Gas (BG), Elf Aquitaine, Enron Corp., Mora Oil Ventures Ltd. (owned by a Trinidadian investor), Repsol SA, and Texaco Inc. were involved in exploration programs there.
Companies also were negotiating new concession contracts with the government and studying the possibility of making offers to explore nine deepwater blocks in the Atlantic Ocean to the east and northeast of the main island.
Trinidad and Tobago`s government in August 1996 called for bids for the first time on nine deepwater blocks, which cover more than 3.7 million acres and are located more than 50 miles offshore in 750-1,750 m of water.
In response to its bid in that round, Exxon Corp. was awarded production-sharing contracts for Trinidad and Tobago`s deepwater Block 25B and 26B. The blocks lie in 2,500-4,300 ft of water.
Norway
Norwegian operators were beginning to explore the Voering and Moere basins off central Norway, where water depths are 1,000-1,500 m.
While a number of deepwater developments and exploration campaigns had been successful off Norway, such extreme water depths posed fresh technological challenges.
As a response to these challenges Norway`sDetNorskeVeritas(DNV) launched several new projects in coordination with the Norwegian Research Council, oil companies, and technology partners.
Projects included deepwater anchor design; reliability-based, cost-effective methods for deepwater mooring; design procedures and acceptance criteria for deepwater risers; and deepwater analysis tools. Total budget was more than 40 million kroner ($6 million).
Arne Loeken, head of the risers and moorings section at DNV, told delegates at the FPSO-TECH `97 conference in Aberdeen how companies were looking to extend their technologies.
"The most important change," said Loeken, "when working in water depths of 2,000 m and beyond is to extend and further develop technology for floater, riser, and mooring systems in terms of architecture, functional loads, and exposure to environmental action.
"The industry has to focus on cost reduction through innovative design approaches, new materials, standardization, and optimized construction and operation procedures."
Atlantic Margin
Pooling technical resources was becoming a common feature of deepwater operations along the Atlantic Margin as well.
ARCO Ireland Offshore, Anadarko Ireland, and BG Exploration teamed up to evaluate Ireland`s deepwater hydrocarbon potential.
ARCO and British Gas gained operatorship of nine blocks from Ireland`s licensing round and planned to review blocks on offer in the 1998 South Porcupine basin frontier licensing round.
Total SA and Marathon kicked off their first campaigns in the Porcupine basin, where there had been little exploration drilling. The semisubmersible Jack Bates late in 1997 spudded a well in 2,300 ft of water for operator Marathon.
West of Shetland
Whatever exploration and development progress may have occurred in the U.K.`s West of Shetland deepwater theater in 1997, it was overshadowed by legal, environmental, and technical problems.
Actually, the legal and environmental problems were interconnected, as environmental lobby groups took to the courts to halt the U.K.`s efforts to license more acreage in the highly prospective West of Shetland region.
Greenpeace late in 1997 lost a court battle for a judicial review of the U.K.`s West of Shetland licensing regime but didn`t give up the war.
Britain`s High Court rejected Greenpeace`s attempt to question the legality of the U.K.`s 17th offshore licensing round, scheduled for 1998.
Claiming the case was lost on a technicality, the pressure group late in 1997 was considering other options, including an appeal against the judge`s ruling, taking the case to the Europe Court, and repeating the protest in time for the next licensing round.
Meantime, Foinaven oil field, the nominal litmus test for West of Shetland deepwater commerciality, ran into technical problems en route to start-up, which had been delayed since late 1995 (details in article on European floating production systems elsewhere in the volume).
BP Exploration Operating Co. Ltd. initially intended to produce first oil from Block 204/24a Foinaven field late in 1995. It finally announced Foinaven start-up on Nov. 26, 1997, with the first well producing at an initial rate of 15,000 b/d.
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