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

US Forest Service takes no stance on fracturing in national forest

12/12/2014

The US Forest Service has dropped a proposal that would have banned hydraulic fracturing in the George Washington National Forest.

Weak crude prices could threaten Bakken production growth

12/12/2014 Bakken shale production set another record in August, but weakening crude prices and flaring reduction efforts threatened to temper production grow...

BHI: US rig count forced down by large losses in Texas

12/12/2014 Forced down by large losses in Texas and specifically the Permian basin, the US drilling rig count plummeted 27 units to settle at 1,893 rigs worki...

Husky reports start of steam operations at Sunrise oil sands project

12/12/2014

Husky Energy, Calgary, reported the start of steam operations at the in situ Sunrise Oil Sands Project in northeastern Alberta.

TAEP: TPI still peaking, but ‘contraction unavoidable’ as oil prices fall

12/12/2014 The Texas Petro Index (TPI), a composite index based on a comprehensive group of upstream economic indicators released by the Texas Alliance of Ene...

Independent assessment hikes Husky heavy oil resources

12/12/2014 Husky Energy Inc., Calgary, says an independent assessment increases its heavy oil resources in the Lloydminster region of Alberta and Saskatchewan.

US needs more data before ending crude export ban, House panel told

12/11/2014 Much more environmental impact information is needed before the US can reasonably remove crude oil export limits, a witness told a House Energy and...

BOEM raises offshore oil spill liability limit to $134 million

12/11/2014 The US Bureau of Ocean Energy Management increased the liability limit for oil-spill related damages from offshore operations to $134 million from ...

Stone drills successful Utica exploration well

12/10/2014 Stone Energy Corp., Lafayette, La., reported that its Pribble 6HU well in Wetzel County, W.Va., flowed from a 3,605-ft lateral at 30 MMcfd during t...

White Papers

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

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Available Webcasts



The Future of US Refining

When 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

When 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



On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


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