December 1998 Vol. 219 No. 12  Offshore

Robert E. Snyder,  Editor

The U.S. Gulf: FPSOs, well control, well counts and resources

While no U.S. Gulf of Mexico operator has yet chosen an FPSO as a deepwater development scenario, the concept is very much alive and under serious consideration. As reported by Offshore Data Services in mid-October, two studies are underway to help Minerals Management Service (MMS) initiate a policy for FPSO use.

The first study is a detailed risk analysis for an FPSO in the U.S. Gulf. Bechtel, several oil companies, engineering contractors and classification societies are heading a joint industry project on this study. An initial report on the study’s findings could be available in early 1999, and a second phase of the study is under discussion.

Statoil, a partner in the Texaco-operated Fuji project, is said to be "pushing" for an FPSO for Fuji, with gas export pipelines and oil offloading via tankers. Statoil has noted an environmentally safe record for FPSOs in the North Sea, citing only nine FPSO incidents during 7,635 oil transfers. Texaco and its partners, however, have not yet committed to a development concept. Fuji is not expected to come onstream for another two to three years.

The second FPSO study project underway is preparation of an environmental impact statement, as declared necessary by MMS. That agency, the U.S. Coast Guard and industry’s DeepStar organization are working on the EIS, and will likely name a contractor to conduct the study before long. At NOIA’s Fall Meeting, MMS Director for the Gulf of Mexico OCS Region, Chris Oynes, told the group that a "very tentative" schedule included a series of public scoping meetings in mid-1999, and a final EIS in mid- to late-2000.

In yet another study, ODS says Coflexip Stena Offshore has completed a case study for a ship-shaped FPS for the Gulf, utilizing both oil and gas export pipelines.

Deepwater well control guidelines. At its annual meeting in New Orleans in late September, the International Association of Drilling Contractors (IADC) announced that, with the Offshore Operators Committee (OOC) and industry contractor / operator support, new deepwater well control guidelines have been developed.

The guidelines are to cover five primary areas: well planning, well control procedures, equipment, emergency response and training. They are intended for operations personnel, and others, that may become involved in deepwater well control. Reportedly, the guideline development organization is working with MMS to use the new guidelines to help the agency formulate new regulations.

Documenting the depressing. The Gulf of Mexico Newsletter of October 26 reported that GOM well activity continued its downward slide in the third quarter. In terms of wells drilled, workovers and permits approved, activity was down "across the board." In the third quarter, only 201 wells were drilled, compared to 300 during the same period last year. For the year, through the third quarter, 730 wells had been drilled, compared to 847 at the same time in 1997. Total GOM mobile offshore rig utilization, with 137 rigs contracted, was 77.8%, compared to 95.4% a year ago. Total worldwide utilization, with about 550 rigs contracted, was 86.2%.

In its October report, the Newsletter offers this comment, "Pie-in-the-sky forecasts of oil prices and well activity picking up by year-end have long since fallen by the wayside. The most optimistic now predict a mid-1999 turnaround, but their optimism is balanced by an equal number of pessimistic forecasts calling for a longer-term recovery scenario."

But the resource is there. When the industry turns around, as it will, it has ample targets in the U.S. to challenge its technology. That is one conclusion from a recently released Gas Research Institute study titled Changing perceptions of remaining U.S. conventional gas resources (GRI 98/0253).

The analysis, prepared in conjunction with Energy and Environmental Analysis Inc., includes the striking observation that 9.7 Bbbl liquids and 40.1 Tcf gas have already been found in the deepwater play. This level of confirmed discoveries is "beginning to challenge" the lower range of total deepwater potential envisioned as recently as 1995. And projection at the level of 85 deepwater fields now producing or scheduled to start up, indicates 1.6 MMbopd oil and more than 5 Bcfd gas can be expected.

GRI’s project manager John Cochener said, "The deepwater GOM is a prime example of a turnaround in resource perceptions. As the 1990s progressed, the Gulf moved from being regarded a "dead sea" with a limited future, to potentially one of the most prolific domestic supply areas. Technology has been the facilitator, allowing industry to extend its reach much farther into the deeper water."

The analysis discusses five diverse new field assessment methods: 1) extrapolation of historical trends, 2) real or volumetric yield, 3) material balance, 4) play analysis, and 5) direct subjective assessment. One misconception is that the growth of proven reserves in existing fields is exclusively tied to "old" fields. A decade-by-decade analysis since the 1940s shows that U.S. reserve growth is distributed across all field-discovery periods. Several other important factors contributing to the growing optimism about the U.S. resource base are identified:

• Shallow GOM shelf areas have excellent potential for both reserve growth and exploration at greater drilling depths, particularly sub-salt intervals.
• The lower-48 states contain extensive volumes of largely unexplored sediments below 15,000 ft. Technical advances have made hard-to-reach deep-gas more economic.
• Statistics show that gas-well recompletion activity in Gulf waters has grown from one-fourth of completions in previous decades to nearly one-half today. Recompletion is one of the lowest-cost methods for adding reserves.
• When the "as published" assessments of the principal monitoring organizations are converted to an equivalent-year basis, all the assessments show a substantial increase over time.

For further information, contact Val Megginson at GRI’s Baseline Center, Arlington, Virginia, fax: 703 526 7808, E-mail: vmeggins@gri.org.

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Copyright © 1999 Gulf Publishing Company