WoodMac: Deepwater Gulf of Mexico E&P to surge in 2013

Wood Mackenzie Ltd. anticipates a strong medium- to long-term resurgence of exploration and production activity for the deepwater Gulf of Mexico following the 2010 Macondo well blowout and resulting massive oil spill offshore Louisiana, which stalled gulf activities for a while.

Gulf production is expected to reach 2 million boe/d in 2018-19, analysts said during an Oct. 3 media briefing at the WoodMac office in Houston.

The Macondo incident and resulting more-stringent US drilling regulations delayed some E&P plans. But WoodMac’s analysts emphasized the gulf is being defined by high investments, a wide range of opportunities, and the large number of companies. Currently 46 operators work in the gulf in more than 400 m of water.

Analysts said the gulf still represents one of the most attractive E&P regions worldwide despite changing US drilling and environmental regulations that pose some uncertainties for oil and gas companies.

“The moratorium and exodus of several mobile offshore drilling units from deepwater gulf in 2010 sharply hindered drilling activity through 2011, but it has rebounded very well in 2012,” said Lauren Payne, WoodMac gulf analyst for upstream research. “We expect this trend to continue, driven primarily by development drilling as operators seek to boost production levels and bring new projects on stream,” she said.

WoodMac forecast that more than $20 billion will be spent drilling development wells alone through 2015. Subsea spending will grow as new projects like Jack-St. Malo development and Hadrian move forward. Together, drilling and subsea spending are estimated at $27 billion through 2015.

Chevron is the operator of the Jack-St. Malo development and has a 50% interest in Jack (Walker Ridge Blocks 714, 715, 758, 759, and a portion of Blocks 802 and 803) and a 51% interest in St. Malo (Walker Ridge Blocks 673, 674, 677, and 678).

Production is expected to start in 2014, and the Lower Tertiary reservoir is in 26,500 ft of water. The combined fields may contain more than 500 million bbl of potentially recoverable oil (OGJ Online, Sept. 7, 2010).

Julie Wiilson, WoodMac senior analyst for exploration service, expects more than $70 billion will be spent on exploration in the deepwater gulf during 2013-30, which would be more than WoodMac anticipates for all the other key deepwater provinces worldwide combined.

“Opportunities in this region range from small, low-risk prospects to giant targets in extreme conditions,” Wilson said. “Abundant infrastructure and an open, competitive environment allow smaller companies to create value from the more mature plays. Larger companies exploring for giant volumes must contend with remote, ultradeep waters, and reservoirs that are buried to extreme depths below thick salt layers that impede seismic imaging.”

Ample processing capacity

Ample unused processing capacity in the deepwater gulf could create significant value for hub owners and satellite operators alike, if the right terms can be agreed upon.

“By 2017, up to 70% of deepwater gulf processing capacity will remain unused, although the available amount will be smaller due to technical and operational reasons,” said Norm Pokutylowicz, WoodMac analyst for upstream research.

“Demand for it will come in the form of infill development and tiebacks, while value will be derived either by operators monetizing their discovered resources or in the form of tariffs from third-party tie-backs,” Pokutylowicz said.

WoodMac forecast an additional 2 billion boe will be produced by subsea tiebacks from fields under development, probable developments, and those yet to be discovered by 2017. By then, new third-party tiebacks are also expected to generate each year an extra $200 million in tariffs.

Potential obstacles to gulf activities include capital, equipment, and personnel constraints in the gulf and worldwide that could affect project prioritization.

“The recent lack of exploration drilling will impact long-term reserves replacement,” Payne said. “In addition, the high-profile Paleogene play still faces substantial technological risks, in an ultradeepwater environment with very poor reservoir qualities. That being said, we are well on our way to achieving this new equilibrium in the gulf in 2013 and the future of the gulf from there is very bright,” she said.

Contact Paula Dittrick at paulad@ogjonline.com.

Related Articles

Inpex starts development drilling at Ichthys field

02/04/2015

Inpex Corp. has started development drilling in Ichthys gas-condensate field in the Browse basin, about 200 km offshore Western Australia.

BG’s 2015 budget ‘significantly lower than 2014’

02/03/2015 BG Group plans capital expenditures on a cash basis of $6-7 billion in 2015, a range it says is “significantly lower than 2014” due to “a lower oil...

BP trims capital budget by $4-6 billion

02/03/2015 BP PLC plans an organic capital expenditure of $20 billion in 2015, down from the previous guidance $24-26 billion. Total organic capital expenditu...

IHS sees second-half end of US output surge

02/03/2015

Expectations are moderating about growth of oil production in the US this year.

Gazprom Neft starts shale oil production in western Siberian field

02/03/2015 JSC Gazprom Neft reported start of shale oil production from the Bazhenov formation during tests of two wells in southern Priobskoye field in centr...

Anadarko reports 2014 loss, remains upbeat about Wattenberg

02/03/2015 Anadarko Petroleum Corp. announced a 2014 net loss of $1.75 billion, or $3.47/share diluted, including a net loss of $4.05 billion associated with ...

CNOOC cuts capital budget, starts production from Jinzhou 9-3

02/03/2015 CNOOC Ltd. is slashing its capital budget for 2015 by 26-35% to $11.25-12.86 billion compared with last year’s budget. Capital expenditures for exp...

MARKET WATCH: NYMEX crude oil stays positive on lower rig count

02/03/2015 Oil prices on the New York and London markets closed higher Feb. 2 on positive momentum generated by a falling US rig count, suggesting cuts in pro...

Obama’s proposed fiscal 2016 budget recycles oil tax increases

02/02/2015 US President Barack Obama has proposed his federal budget for fiscal 2016 that he said was designed to help a beleaguered middle class take advanta...
White Papers

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts

On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected