Dec. 2001 Vol. 222 No. 12  Drilling Developments

Robert E. Snyder,  Editor

Interesting NOIA panel; Offshore newbuilds slacking off

The National Ocean Industries Association’s Fall Meeting was held in Colorado Springs, Colorado, in October, with 165 attendees. Summaries of the several working committees were presented in the NOIA’s Washington Report of October 24. Also summarized was what is called the "undisputed highlight of the meeting," the general session titled, "The offshore response to the nation’s need for oil and natural gas." With Global Marine’s Bob Rose as moderator, the four panelists were Al Thomas, President / COO of PetroQuest Energy; Bill Sullivan, Exec. VP, E&P, Anadarko Petroleum; Rodney Erskine, President, El Paso; and Dave Lawrence, VP, E&D, Shell E&P.

Thomas kicked off the discussion by detailing his company’s approach of using experienced technical staff and energy finders to generate shallow-water prospects with a high rate of return. "We average about 25 years’ experience on the technical staff," said Thomas. "We’re presently exploring in water depths of up to 300 ft because of costs, turnaround time, existing facilities and tides. We’re heavy on original geology, 3-D seismic, and the latest drilling / completion techniques."

He walked the audience through a recent success in the Ship Shoals area of the U.S. Gulf. First discovered in 1948, this field had been in continuous production until late 2000, when PetroQuest acquired it. After collecting all information they could and reprocessing 3-D seismic, the company sidetracked four wells to get production going again and to save the lease. And they were very successful. This acquisition is a way to get hydrocarbons out of a very mature field that is not getting a lot of attention and possibly no more drilling. "It’s a very key business for us as a small independent, but well below the hurdle rate of a major," Thomas said.

El Paso’s Rodney Erskine introduced El Paso as "kind of in the middle between where PetroQuest is and a major," though he pointed out that its recent acquisition of Coastal Oil and Gas Corp. probably makes it "the second largest operator on the shelf after Chevron." Erskine concentrated much of his remarks on revitalizing mature provinces through the use of new technology to drill deep beneath the mudline. He showed that more than 300,000 wells have been drilled on the onshore Texas coastal plain, but noted, "You’ve only got 30,000 wells below 10,000 ft; 7,000 below 13,000 ft; and only 2,500 below 15,000 ft."

He showed that more than 67% of El Paso’s wells are deeper than 10,000 ft. And an El Paso well, on average, produces 1.5 Tcf/d, compared to the industry average of 300 Mcf/d. He said the same possibility exists offshore. "There are over 50,000 wells drilled in the Gulf, but not many of them are very deep – in a basin that is probably productive to 40,000 ft."

Shell’s David Lawrence elaborated on the enormous significance of the deepwater production relative to America’s energy needs, pointing out that the deepwater Gulf is now producing 1.4 MMbopd. He said industry has been successful in reducing technical costs, particularly with regard to subsea systems. However, he also noted that, "Drilling is a big deal out there. These wells cost $50 million plus; so it’s not for the faint of heart, and the cost of failure is tremendous."

He added that there currently exists "a lot of new technology to get us through this – subsurface visualization, advancement in drilling technology, such as slimmer wellbores and less casing strings through use of expandable tubulars." He also pointed out the value of cluster development, or grouping marginally profitable wells with subsea systems that tie back through a centralized host.

Bill Sullivan focused most of his presentation on the promise and challenges of subsalt development. Utilizing sophisticated pre-stack depth migration imaging techniques, Anadarko’s technicians are able to see the base of salt formations better, and even some structural / amplitude changes below the base of the salt, that help in defining the drilling target. This process can be extremely time consuming, he said, taking – in some cases – most of a five-year lease term simply to do the technical work. However, he emphasized that while the challenges were clear, the payoffs were promising. "We think there’s probably five billion barrels of the remaining potential in the Gulf of Mexico residing in the subsalt fairway, and that’s an interesting target for us," he added.

In addition to posting partial clips of the panelists presentations to its website, NOIA will be producing a white paper synthesized from their remarks. For more information on the producers’ panel, or the forthcoming white paper, please contact NOIA Director of Public Affairs, Tom Michels at 202 347 6900, or E-mail: tmichels@noia.org.

Offshore rig construction. This issue contains World Oil’s annual Directory of Marine Drilling Rigs 2001/2002, showing important performance data of the world’s fleet of jackups, semisubmersibles, drillships, barges and submersibles. Significantly, there were minimal changes in the numbers during the last year, although the ownerships of several rigs did change, primarily due to a couple of mergers, like Transocean Sedco Forex and R&B Falcon, and Pride and Marine.

The ODS-Petrodata Group’s Offshore Rig Locator of October 22 has a useful analysis of offshore rig newbuildings, including a table of delivery of five categories of rigs from 1990 through 2004. Following a peak delivery of 23 in 1999, there were a couple of good years through 2001, then expected deliveries start tapering off sharply, to four in 2004.

The report says nine new rigs have entered the fleet through October, and four more are expected by year-end, including 10 semis, one jackup, one drillship and one tender. Three of the semis went to Transocean, two to Pride, and one each to Diamond Offshore and Smedvig. Two deliveries before year-end are expected to Ocean Rig, and one to Stena. The only drillship delivered this year was Transocean’s Deepwater Horizon. Nine semis and 10 jackups are slated for deliveries during the next three years. For more information, call the ODS-Petrodata Group, Tel: 1 832 463 3000; E-mail: research@ods-petrodata.com.