June 2001 Vol. 222 No. 6  Offshore

Robert E. Snyder,  Editor

OTC 2001; new fab yard; GOM gas decline

The 33rd annual Offshore Technology Conference convened for four days in Houston, April 30 – May 3, under a positive atmosphere. Counting exhibitor personnel, the total registration figure was 47,649 – up 3,864 from last year. With 2,185 companies from 80 countries exhibiting their products and services, there was plenty to see – in between trying to catch a few of the 275 technical papers.

The exhibitors appeared pleased with the quality and interest of the attendees. There was not much missing for an educational tour of what it takes to drill for, and produce, oil and gas offshore. While, in my opinion, there were fewer "new concepts" being displayed as developers and operators get down to the business of applying what they have, there were many new products displayed that prove the industry is still inventing.

New offshore joint venture. Two of industry’s leading service companies ABB and Schlumberger announced at OTC that they have formed a new 50/50 joint venture called Syntheseas, an ABB/Schlumberger company. The organization combines the strengths of Schlumberger’s reservoir development and field management capabilities with ABB’s offshore structures, topside processing and subsea expertise, for rapid field development. The new JV is headquartered in London, with teams in Houston and Aberdeen. It is composed of 50% employees from each core company, providing a balance of subsurface and subsea expertise.

Target markets are global, with initial focus on the North Sea, West Africa and the Gulf of Mexico. The JV’s expertise is obviously geared to handling offshore developments from exploration drilling through first production, but it is not intended to prevent core company participation in other operations relative to that company’s basic expertise. The JV’s Web site for more information is www.syntheseas.com.

New GOM fabrication yard. With Gulf of Mexico business on the upswing, Kiewit Offshore Services, Ltd. (KOS), a unit of Peter Kiewit Sons’ Inc., is opening a new $100-million fabrication yard in Ingleside, Texas. As reported by ODS-Petrodata’s Gulf of Mexico Newsletter, the new facility is under construction on 400 acres of land bordering La Quinta Channel, providing quick access for barge transportation.

The yard will feature 3,600 ft of bulkhead for heavy loading operations, with water depth alongside of 45 ft. The yard will also provide four contiguous bays, a climate-controlled storage building, and automated shape-cutting and brace-cutting facilities. Onsite equipment will include 660-t crawlers, material handling equipment and modular trailers for moving large components. Employment will eventually top 1,000.

The company is prepared to tackle a variety of projects, including jackets, TLPs and topsides, as well as other offshore facilities, plus topside fabrication for FPSOs. The facility will be ready for fabrication services in June 2001, with final completion scheduled for January 2002.

Gas decline in GOM. The Gulf of Mexico Newsletter also reports that natural gas production in the GOM continues to wane in the face of increasing demand, spurring additional drilling activity. According to the MMS, last year’s total U.S. Gulf production fell for the third straight year. Estimated production for the entire Gulf stands at 4.88 Tcf for 2000, down from 5.06 Tcf in 1999. It reached a six-year peak of 5.14 Tcf in 1997.

The decline would have been steeper without continuing increases in deepwater production. Every year for the last six years, gas production from deepwater wells has played an increasingly large role in total Gulf gas production. Last year, operators produced 0.98 Tcf from deepwater wells, a six-year high – up 444% from 1995’s 0.18 Tcf.

Still, shallow-water gas production continues its sharp decline from a six-year high of 4.80 Tcf in 1996. Total 2000 shallow water production is estimated at 3.90 Tcf, down from a 1999 total of 4.48 Tcf. Production continues to decline, despite increased activity by rigs rated for less than 600-ft water.

Strong FPS market. The next five years could see 123 floating production systems (FPSs) of various types coming onstream, with a newbuild value of $42 billion. A major new report launched at OTC by oil / marine business analysts Douglas-Westwood and offshore field data specialists Infield Systems expects annual value of the market to grow from $5.9 billion in 2001 to $10.9 billion in 2005.

With several types of floaters in use and/or proposed, the report forecasts that 80% of future expenditures will be on FPSOs. And it expects that Africa will grow into the largest market, with a total value of $11.6 billion over the five years, followed by Latin America (Brazil), with a total $7.9 billion.

According to Infield, the upside could be even greater. Over the period, a total of 153 field prospects are under consideration for development using an FPS, by 48 oil / gas companies. Just five companies total 86 (52%) of the prospects: Petrobrás 19, BP Amoco 18, Chevron Texaco 16, TotalFinaElf 12, Shell 11 and ExxonMobil 10. As noted, Africa is forecast to form the largest market. Although North America has 25 floaters in prospect currently, all are semis, SPARs and TLPs. FPSOs have not yet been deployed in the GOM.

In theory, the report says, over the next five years, some 55 FPSs could become available for re-use due to field depletions, with a potential to reduce the demand forecast of 123 units to 68. However, this scenario is unlikely, as field depletion dates could be extended due to robust oil prices and conservative initial estimates of field life. In addition, some of the earlier units may not be suitable for re-deployment.

The report coincides with the sinking of the P-36 floater; and it notes that, following the tragedy, concerns have been raised over operations of the other floaters offshore Brazil. But John Westwood said that, "The alternative of fixed platforms has also been the subject of tragic events, and we will be very surprised if the eventual outcome of the inquiries casts doubt over the concept of floating production." For information on the report, call 44 1227 831879; e-mail: admin@dw-l.com