Port Fourchon is place to be, as deepwater demand soars

In a popular 1989 movie, an otherworldly voice intones, “If you build it, they will come.” Should that ethereal declaration manifest itself in the real-world version of “Field of Dreams,” playing out in Louisiana’s Port Fourchon, it would have to be edited to reflect present-day reality: “Before you build it, they will come.”

And, come they do. Bolstered this year by 14 newbuild floaters joining the active Gulf of Mexico fleet, and no less than five high-profile production systems coming online, all the indicators point to an aggressive, sustained build-up in deepwater and ultra-deepwater drilling and production. The heightened activity, in turn, has supporting players in a race for space, to accommodate the ever-increasing demand for super-sized supply vessels, consumables and services. As evidence, the hydraulic dredges had no more cooled their engines from shaping up the port’s latest development, before a prospective tenant stepped up to grab first rights on a significant chunk of the waterfront acreage to be carved out in the proposed Slip D, which is yet to even be permitted, Fig. 1.

Fig. 1. The unpermitted Slip D in Port Fourchon’s Northern Expansion may still be in the proposal stage, but that has not prevented a prospective tenant from grabbing a foot-hold (courtesy, Greater Lafourche Port Commission).

“The deepwater Gulf of Mexico is doing well, and the forecast is unbelievable,” says Port Fourchon Executive Director Chett Chiasson. “It (forecast) connects with what we’re seeing in the port, with the growth and demand for property. With the growth that’s coming, companies have to do everything they can to meet the demand.”

Virtually all the support for that activity sails out of Port Fourchon in Lafourche Parish, a once largely inaccessible swamp, now widely acknowledged as “The Gulf’s Energy Connection,” and one of the country’s most valuable pieces of seaside real estate. Consequently, companies rush to the head of the line to lock up leases, even those that may be years away from providing tenantable deepwater access. A case in point is giant Edison Chouest Offshore of neighboring Galliano, La., which signed right of first refusal for 2,000 of the more-than-8,200 linear ft of waterfront access in the yet-to-be-permitted Slip D segment of the port’s 13-year-old, 800-acre Northern Expansion campaign. No timeline has been established, as to when the slip will be available for tenancy, and augment the more than 12 mi of now-developed waterfront leases within the jurisdiction of Port Fourchon.

“We’ve completed the public notice process through the Louisiana Department of Natural Resources (DNR), and we are awaiting approval from the (U.S.) Corps of Engineers for the design permit,” Chiasson said in late January. “We hope to have the permit in hand within the next four to six months. As soon as we get the permit, we’ll start the initial bucket dredging to create the levies, which basically outlines the slip, so we can start development. Everything depends on how quickly we can get the permit, and complete all the hydraulic dredging, to allow us to start the actual construction.”

For the most part, the steadily escalating demand in activity centers on the expanding boundaries of the Central Gulf of Mexico, primarily off Louisiana, where the urgency for high-capacity support vessels as large as 300 ft, plus mud, tubulars, cement, fuel and other materials, magnifies appreciably in proportion to the ever-deepening waters that operators are exploring.

“It’s really exciting, when you look at all those new rigs coming into the Gulf of Mexico, and realize that the majority of them will be coming into the Central Gulf. That means our tenants will be servicing nearly all of them, and that’s exciting for us,” Chiasson said. “That’s why we’re trying to keep up, and do everything we need to do quickly and smartly, to meet that demand,” Fig. 2.

Fig. 2. The Slip C bulkhead project is another example of forward-thinking strategy by the Greater Lafourche Port Commission.

FULL-BLOWN REVIVAL

Meeting demand has become the directive du jour, in and around Port Fourchon, and for good reason. The upturn that began accelerating early last year is now going full throttle, with Baker Hughes reporting 53 rigs drilling in the Gulf of Mexico as of March 7, compared to 50 in the like period last year. As of March 13, Rigzone data show 29 of the active rigs drilling in water depths exceeding 600 ft, Fig. 3. The number is set to increase substantially throughout the year, moving the deepwater Gulf of Mexico ever closer to what analysts predict to be at a 60-rig theater by early next year.

Fig. 3. Deepwater Gulf of Mexico drilling activity from 2009-2013 (source, U.S. Bureau of Safety and Environmental Enforcement).

In mid-February, the U.S. Bureau of Safety and Environmental Enforcement (BSEE), the chief federal regulatory agency, released its “Gulf of Mexico Update,” in which Deputy Regional Director Michael Prendergast listed 14 newbuild deepwater rigs entering the Gulf of Mexico during 2014. Prendergast said another two drillships, the Rowan Reliance and the Noble Tom Madden, are expected to set sail from their respective shipyards, and enter the Gulf in first-quarter 2015, making a grand total of 16 new floaters set for delivery over the course of a year.

The 2014 newbuild additions include Seadrill’s ultra-deepwater West Auriga drillship, which is locked under a long-term contract with BP for ongoing development of its Thunder Horse field. Between the newbuild drillship and the recent addition of a reconstructed rig earmarked for its Mad Dog development, BP now has a company-record nine rigs in its deepwater Gulf of Mexico fleet.

Meanwhile, new drills and development drilling aside, as the Gulf of Mexico matures, it likewise creates intervention opportunities. That’s because operators either plug and abandon (P&A) older wells, or perform workovers to increase production, says Tommy Fanguy, president of Supreme Service & Specialty Co. of Houma, La., which was named the 2013 Southwest Oil & Gas Awards’ Industry “Supplier of the Year.”

“Instead of just new drills and completions, operators have to work over a lot of those older wells. It’s not just P&A, but also a lot of stimulation, where they’re going in and cleaning out the wells, removing the jewelry and perhaps doing some perfs and kicking off new zones,” he said. “That’s where intervention comes in, and that really benefits companies like us.”

Still, it is the arrival of new drilling rigs that deepwater players point to as ample justification for the near-universal belief, that the good times have arrived and look set to remain for awhile. “We are all aware of the new rigs coming to the Gulf of Mexico in the near future, and we are working at being ready to handle the demands these new rigs will bring,” said Ron Domangue, Port Fourchon senior warehouse manager for M-I SWACO, a Schlumberger company. “We have to look at our capabilities today, and what the need will be in the very near future, to meet the demands of new activity and maintain our costs at an acceptable level.”

That future is being shored up, in large part, by the more-than-$20 billion in operator investment that Wood MacKenzie calculates will be earmarked for deepwater Gulf of Mexico developments through 2015. According to the U.S. Energy Information Administration (EIA), the Gulf of Mexico, which last year accounted for 19% of the nation’s total oil production, is on track to increase output by some 180,000 bopd to 1.55 million bopd by the end of the year.

“The Gulf of Mexico continues to be an energy powerhouse and economic engine for this country,” said Lori LeBlanc, executive director of the grassroots, Gulf Economic Survival Team (GEST), which represents the industry on federal permitting and compliance issues.

WHOLESALE EXPANSION

The Wood MacKenzie computation does not include the gargantuan investments that service and supply companies, vessel operators and contractors are allocating within Port Fourchon, and the surrounding areas, to expand their local infrastructure.

“We’re mostly seeing expansions by current users of the port,” Chiasson said. “Some are tenants, and some are users of the port and need to expand. For example, we’re building a bulkhead for Schlumberger, which has been in the port forever, but needed another facility. Like everyone, they need more room to handle the deepwater activity that’s coming.”

Local behemoth Bollinger Shipyards of nearby Lockport, La., is among the long-time tenants expanding its local footprint. Bollinger says its new 46-acre Fourchon North full-service shipyard is expected to be in operation by the fourth quarter, Fig. 4. Robert Socha, Bollinger V.P. of marketing and sales, said the new facility will accompany two 10,500 dry docks, and two 5,000 and 2,000 dry docks. The facility also will comprise a fabrication shop and machine shop, a business center with office space for customers and vendors, and permanent housing for workers.

Fig. 4. Bollinger Shipyards’ full-service Fourchon North facility, now under construction (courtesy, Bollinger Shipyards Inc.).

“Our decision to expand our presence in Port Fourchon came about by way of customer needs for expanded services in the port,” Socha said. “We anticipate a greater demand for shipyard services from operators working from the port, and we are looking to focus on servicing the growing number of deepwater support vessels and rigs entering the Gulf of Mexico region from this strategic port facility.”

Socha said Bollinger will continue to operate its existing Fourchon South facility (Fig. 5) for rig and vessel topside repair, load-outs and dry dockings. That facility is home to the recently delivered, 10,500-ton Mr. Paul dry dock, measuring 320 ft x 100 ft between the wing walls. The Mr. Paul will relocate to the north facility, once construction is complete, leaving the South facility to focus mainly on top-side repairs for rigs, boats and support vessels, and as a staging area for project cargos, Socha said.

Fig. 5. Bollinger Shipyards will continue to operate its current Fourchon South facility, adjacent to C-Port 1 and 2 (courtesy, Bollinger Shipyards Inc.).

Bollinger’s expansion northward is underway on Slip C, which kicked off the second phase of the port’s sprawling Northern Expansion project, authorized by the Greater Lafourche Port Commission in 2000, Fig. 6. The completion of dredging and bulkheads for Slips A and B wrapped up the first phase of the ongoing campaign. Along with Bollinger, Edison Chouest is erecting C-Port 3 at the head of Slip C (Fig. 7), with plans on the books to build an adjacent fourth version of its covered deepwater supply facility.

Fig. 6. Bulkhead West construction on Slip C, which kicked off the second phase of Port Fourchon’s 800-acre Northern Expansion (source, Greater Lafourche Port Commission).

Fig. 7. Edison Chouest is building C-Port 3 in Slip D, and has plans for an adjacent fourth C-Port (staff photo).

Chiasson said that roughly 16,000 linear ft of waterfront were recently created in Slip C. As of March, all Slip C property is leased or held under right of first refusal. “Companies are constructing their facilities in there now, and we’re in the process of building 2,600 linear ft of bulkhead,” he said. “Our bulkhead construction numbers may increase even more, as Slip C tenants grow their businesses.”

With Slip C, Port Fourchon now has 1,100 acres under lease with some 80 tenants holding 136 cumulative leases, Chiasson said, adding that even he was pleasantly surprised at the latest statistics on the total waterfront sites created and under lease. “We have nearly 66,000 linear ft of waterfront leased. That’s over 12 miles of property that’s actually leased and that doesn’t include what we’re creating now and what’s proposed,” he said. “We’re adding over 13,000 to 15,000 linear ft with what’s just proposed now.”

The port director said the design of the proposed Slip D is being modified to better accommodate the huge support vessels that will be required to handle the capacities and daunting logistical challenges of deepwater and ultra-deepwater projects. “Instead of the typical 700-ft widths, Slip D will be 1,000-ft wide to accommodate the larger vessels, but with the same 27-ft draft. The channels will be a bit wider, and mooring space increased from 200 to 300 ft, on each side,” Chiasson said. “The industry and vessel folks are saying they ideally would like 35-ft drafts, so we’re looking at that. We’re always looking at how we can better accommodate the oil and gas industry with whatever they may need.”

And, that includes temporary mooring space for the continually growing flotilla of oversized vessels. The port replaced its old-generation buoys with a cumulative 44 mooring dolphins that are more capable of providing temporary docking. As of early this year, all are under lease, Chiasson said. “Like everyone else, with all the large vessels being built, we needed more space for docking,” he says. “We have 45 to 50 vessels, 300 ft and larger, coming, and nearly all of those will touch Port Fourchon at some point.”

It goes without saying, but those vessels also will require tremendous volumes of fuel, which likewise requires more space, as illustrated by privately held John W. Stone Oil Distributor taking over the 1,100 ft of waterfront property once held by Cal Dive. Martin Energy Services, which has supplied diesel, as well as lubricants, glycol, methanol and other products, in Port Fourchon for 25 yrs, also is looking at any expansion opportunities. Martin currently operates five facilities in the port with total diesel capacity of 7 million gal.

“Things have really turned around in the Gulf. We’re seeing a lot of really large boats and also a lot more seismic vessels,” said Martin Area Manager Robbie Plaisance. “We need to accommodate these vessels at the dock, as they need to get in and out as quickly as possible. With all that’s happening now, we have to plan for the future in the Gulf.”

The increased movement within the port has kept Allport Services’ facility hopping, with the full-service logistics company recording a 40% increase in new projects in 2013, compared to the previous year, and inspiring the company to seek more room, said President and CEO Dwayne Rebstock. “In 2014, we expect to see the same number of projects as 2013, with slight increases projected in both the second and third quarters. We are planning two major capital projects for 2014. These include development of our remaining five acres of property, and the construction of a permanent warehouse.”

Like fuel providers, drilling fluid companies have to beef up onshore capacity to keep the ever-enlarging storage holds of support vessels filled. Obviously, deepwater wells require tremendous volumes of mud, and vessels must be designed to deliver those volumes without requiring constant turnaround. “We used to see vessels carrying 4,000 bbl, and now it’s not uncommon for one vessel to have 20,000 bbl of mud on the water at any one time,” said Joe Szeplaki, Baker Hughes distribution manager.

To keep those boats and the rigs continually fed, Szeplaki said Baker Hughes is planning to spend millions to expand its liquid mud plant in Port Fourchon for future ultra-deepwater projects. “We’re also replacing our old bulkhead with a new bulkhead, to make sure we’re prepared to accommodate these larger boats coming in.”

The same for Halliburton’s Baroid division, which with completion of a 49,000-bbl expansion currently under construction, will have total capacity of more than 250,000 bbl at its Port Fourchon facility, said Michael Moore, stockpoint manager. “We continue to plan for an increase in the deepwater rig count during 2014 and 2015. We are actively working toward acquiring additional property for expansion,” he said.

AIRPORT IN MIX

The push to enlarge local infrastructure also extends to the port-operated South Lafourche Leonard Miller Jr. Airport, where Chevron is constructing a $29-million aviation center on its 40-acre site, to serve its deepwater operations. Chiasson said the airport’s largest tenant is constructing a terminal and a huge parking lot to accommodate the estimated 6,000 incoming and outgoing passengers expected to use the facility each month, Fig. 8. Along with 40 aircraft, Chiasson said Chevron also recently acquired two new, giant, Sikorsky S-92, four-bladed helicopters, capable of ferrying 20 passengers, each.

Fig. 8. On hand for the November groundbreaking for the $29-million Chevron airport facility were, from left, Steve Judd and Mike Casey of Chevron; Greater Lafourche Port Commission Executive Director Chett Chiasson; Louisiana State Senator Norby Chabert; Lafourche Parish President Charlotte Randolph and Chevron’s Warner Williams.

“Basically, Chevron is expanding what they had at their Leeville facility and ramping up for all the deepwater work they’re doing. This will be the main aviation and logistics facility for their Gulf of Mexico operations,” Chiasson said. “We’re really excited about that, because they’re doing this for the long haul. If you’re spending nearly $30 million, you’re here for the long term.”

Edison Chouest also expanded its aviation presence with a new airplane, bringing to four the planes it now has under hangar at the airport.

The port continues to expand its capacity at the airport, as well. “This year, we’re building more ramp space that will allow us to double the planes we can park there. In addition, we’re doing the design work this year, and in 2015, we should have a brand new terminal being built at the airport,” Chiasson said.

NEW PRODUCTION ON TAP

Chevron’s airport expansion can be justified, in no small part, by its two high-status deepwater and ultra-deepwater production systems, set to begin flowing oil and gas this year. The Chevron-operated Jack/St. Malo and Big Foot fields in Walker Ridge Block 718 and Walker Ridge 29, respectively, are among no less than five deepwater production systems that BSEE has identified for start-up this year.

“We’re doing a lot of subsea work right now, and permanent mooring for offshore platforms,” said Intermoor Fouchon Facility Manager Wayne St. Pierre. “Things are looking up, and it’s getting real busy down here in Port Fourchon.”

In March, the Jack/St. Malo semisubmersible production facility arrived on location and was subsequently moored in 7,000 ft of water. With a production capacity of 170,000 bopd and 42.5 MMcfgd, the Jack/St. Malo semi is the hub for 43 subsea wells.

Elsewhere, Shell was to begin delivering first oil from its Olympus TLP Mars B subsea development in Mississippi Canyon 806 in the first quarter (Fig. 9), while Anadarko expects to begin producing up to 80,000 bopd from its and Exxon Mobil’s Lucius deepwater field on Keathley Canyon 875, late in the second quarter. Anadarko said appraisals at its Coronado, Yucatan and Shenandoah discoveries highlight the operator’s six-to-eight-well 2014 deepwater Gulf of Mexico drilling program. Also coming online later this year is the Hess-operated Tubular Bells development at Mississippi Canyon 725.

Fig. 9. The Shell Olympus TLP, on location at the Mars B deepwater field in Mississippi Canyon.

Beyond 2014, BSEE has documented no less than four additional deep- and ultra-deepwater production systems on tap for first oil over the next two years. Those include LLOG Exploration’s Delta House on Mississippi Canyon 254, the second phase of the Mars B TLP development, both scheduled for installation in 2015, and the planned 2016 start-ups of Anadarko’s Heidelberg on Green Canyon 860 and Shell’s Stones on Walker Ridge 508. The latter would be the second FPSO in the deepwater Gulf.

WORLD COMES LOOKING

Despite being situated in what otherwise would be a relatively quiescent corner of the Louisiana coast, the steady build-up of Port Fourchon has wholly transformed this onetime marsh into a key cog in meeting the nation’s growing energy demand. And, the operational and methodological advancements within Port Fourchon over the past several years have not gone unnoticed in the rest of the world, Fig. 10.

Fig. 10. Aerial view of Port Fourchon (courtesy, Greater Lafourche Port Commission).

In the spring of 2013, Norwegian mega-giant Statoil decided that it was time for its chairman and other members of the upper executive staff to leave Stavanger and get a look-see, at what was relayed to Chiasson as its most efficient global operations center.

“They told us in a meeting that after two years of being serviced out of Port Fourchon, Statoil looked around and decided its most efficient drilling operation, anywhere in the world, was run out of Port Fourchon,” Chiasson said. “That’s why, they said, they wanted to bring their chairman and several executives to see what we do here.”

What the Norwegians discovered, however, was something that the locals have known all along. “The thing about the port is whether you’re dealing with the port commission, the maintenance people, the harbor police, the vegetation people or the people taking care of the roads, they are all pretty squared-away, efficient and caring. It’s just a well-run machine,” said Colby Crenshaw, general manager of family-owned Tiger Offshore. “Operators have said they can do with a handful of people in Port Fourchon what would take 50 in other parts of the world.” 

FULL SPEED AHEAD FOR BEACH RESTORATION PROJECT  The placement of roughly 3.31 million cubic yards of sand is expected to be completed in May. This is part of a $70-million restoration project, to create 303 acres of new beach and dune habitat at the heavily eroded Caminada Headland, to the immediate south and east of Port Fourchon. The undeveloped, 14-mi-long headland, which stretches west-to-east from West Belle Pass to Caminada Pass, has experienced severe shoreline erosion and land loss, averaging 35 ft/yr over the past century. Under the auspices of the Coastal Protection and Restoration Authority (CPRA), the Caminada Headland Beach and Dune Restoration Project aims to reverse some of the losses of marsh, wetland, beach and dune habitats from years of storms, salt water intrusion, wind and wave erosion, sea level rise and subsidence. Coastal Impact Assistance Program (CIAP) and 2008 state surplus funds are being used to dredge and barge beach-compatible sand, 27 nautical miles from Ship Shoal to the Caminada Headlands (Fig. 1). The sand is barged to a staging area near the mouth of Belle Pass, where it is pumped through a pipeline for placement on the shoreline. There, it will reinforce roughly 6 mi of barrier headland habitat, important for both nesting shorebirds and migratory birds, and critical for the endangered Piping Plover. Once construction is finished, the area will be planted with native vegetation, with the total project expected to be completed sometime next year.   Fig. 1. The Caminada Headlands restoration project includes dredging and sand placement to reinforce 6 mi of barrier headland habitat (source, Greater Lafourche Port Commission).    The Caminada Headlands project began construction shortly after the port wrapped up its own beach repair project. Repairs included replacement of Fourchon Beach’s so-called “boudin bags,” which resemble large links of a sausage, with new-generation geotubes.   Fig. 2. Aerial view of Fourchon Beach (source, Greater Lafourche Port Commission).    Last year, Shell Oil Co., on behalf of its Mars B deepwater team, contributed $500,000 to the Greater Lafourche Port Commission, to help fund the Fourchon Beach Repair/Re-nourishment Project (Fig. 2). The Shell contribution, as well as state and federal funding, is being directed to help provide critical storm surge protection and reduce the impact of a direct hit to Port Fourchon.