Monday, June 29, 2009

Gulf of Mexico Forecasts Record Oil Production

Gulf of Mexico Oil production is believed to be heading for greater heights, hitting 1.9 mbpd in a few years, up from 1.2 of last year:

Gulf of Mexico oil production is forecast to increase substantially over the next few years, possibly reaching 1.9 MMb/d in 2013 which would be a record high, according to Richie Baud, MMS deputy regional supervisor for the Office of Production and Development. This is MMS’ best-case scenario, which factors in industry-announced discoveries and undiscovered resources.

Recent startups at BP-operated Thunder Horse (capacity: 280 Mb/d oil; 200 MMcf/d gas), BHP-operated Shenzi (capacity: 100 Mb/d oil; 50 MMcf/d gas), Chevron-operated Tahiti (capacity: 125 Mb/d oil; 70 MMcf/d gas), and volumes of oil and gas production coming back online from hurricane shut-ins, are reversing the GoM oil production trend upward, albeit temporarily, beginning this year. MMS says 75% of the increase in oil production and 72% of the increase in gas production will
result from hurricane shut-ins coming back online.

Well, gas might down in a couple of years (but who cares - we've got a centuries worth of gas here onshore)...

Meanwhile, based on existing shallow water and deepwater operator commitments,
GoM natural gas production is forecast to increase slightly this year over last year, to about 7 bcf/d, according to MMS. However, in 2010, gas output is forecast to begin declining again, even with the addition of resources from industry announced discoveries.

Nevermind; onto the good news...

In 2008, operators announced 15 new deepwater discoveries, almost double
the number reported in 2007.
Seven new deepwater projects (Bass Lite, Neptune, Blind Faith, Mississippi Canyon block 161, Raton, Thunder Horse, and
Valley Forge) began production last year, bringing the total to 141. This is up from 130 at the end of 2007. Meanwhile, 73% of the tracts receiving bids in the three GoM lease sales held in 2008 are in deepwater.

Say, haven't peakers been loquaciously warning about declining oil discoveries? With Brazil, Angola, Iran, Saudi Arabia, the Arctic and the Gulf of Mexico, it looks like there's plenty of oil left to be found...

Much of the new development in the GoM is in ultra deepwater (water depths greater than 5,000 ft [1,524 m]), and often targeting high temperature and high pressure prospects beneath salt canopies with layers of tar, which complicates drilling and production. This requires rigs equipped with the latest technology, and production systems suited for harsh weather, in areas with minimal existing infrastructure.

“The deepwater frontier has entered a new phase,” says Mike Prendergast, MMS chief of staff, GoM region. He points to the increasing use of hub facilities as a trend
in deepwater development. “Hub facilities will serve a bigger role as drilling moves to deeper waters, and this will require further development of MODU technology as many of the hubs lack drilling capacity,” he says.

Chevron recently announced it has initiated front-end engineering and design of a new deepwater hub to develop the Jack and St. Malo discoveries. The floating
production platform will be a semisubmersible designed facility with an initial nameplate capacity between 120,000 and 150,000 b/d of oil, 37.5 MMcf/d of gas, and provision for a future 200,000 b/d of water injection. It will be moored in 7,000 ft (2,134 m) of water. Mustang won the contract for topsides FEED, with completion expected in 2Q 2010.


Many of the newbuild MODUs scheduled for delivery to the GoM will be equipped with DP systems, and capable of drilling in up to 12,000 ft (3,658 m) of water to 40,000 ft (12,192 m) TD. In 2007, MMS reported a record number of
rigs (15) drilling in ultra deepwater.
Although this record has not
been surpassed, MMS expects increased drilling in this water depth, with 15 newbuild MODUs scheduled for delivery to the GoM in 2009-2011. MMS expects two
new drillships and six new semisubmersibles in this year, five new drillships
and one semisubmersible in 2010, and one new semisubmersible in 2011. Also, four
semisubmersible rigs are being upgraded to drill in ultra deepwater, with delivery to the GoM expected in this year and in 2010.

- Brewskie

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