Building infrastructure

June 6, 2005
Marginal wells and fields are stripper wells and fields operating near their economic limits or with development not meeting a company’s economic or risk criteria.

Marginal wells and fields are stripper wells and fields operating near their economic limits or with development not meeting a company’s economic or risk criteria.

Although no one wants to produce properties at a loss, what is considered an acceptable risk or profitable property varies considerably between operators of considerably varying size. Government-owned companies have their own sets of economic parameters to determine what is marginal.

Whatever the threshold, a key to developing and keeping a marginal property on stream is proximity to infrastructure.

Stripper wells

The first article in the special report on marginal production, p. 43, discusses the Interstate Oil and Gas Compact Commission’s latest survey on stripper wells. The survey found that in 2003 US stripper production was a sizable 314 million bbl of oil and 1.5 tcf of gas from 400,000 oil wells and 260,000 gas wells.

IOGCC based its definition of stripper wells on volume and not on economics. Even though these wells produce less than 10 bo/d and 60 Mcfd, they can be very profitable, especially with prices at current levels of about $50/bbl of oil and $6/MMbtu of gas. Stripper well operations in the US usually benefit from being in areas that provide a developed infrastructure.

Definitions of marginal fields take into account economic limits or the rate of return rather than a strict volume.

Remote fields with sizable reserves and highly productive wells may fall into the marginal category if the infrastructure cost is too high for a single field to absorb. The deepwater Gulf of Mexico provides numerous examples of marginal discoveries requiring innovative approaches to development.

Deepwater Gulf of Mexico

The deepwater gulf’s many marginal discoveries usually require long tie-backs to hubs that process produced fluids from several fields with different ownerships. Without the infrastructure, these fields would remain uneconomic to develop.

One recent example is the Independence Hub. Five exploration and production companies have joined a midstream energy company and a company involved in marine services as well as producing properties to develop ultradeepwater gas discoveries near the coast of Florida, an area without any current production infrastructure.

The development plan includes the installation in 8,050 ft of water of a regional floating hub platform capable of processing 850 MMcfd and 4,250 b/d of condensate and having 62,500 hp compression. Enterprise Products Partners LP and Cal Dive International Inc. will own the platform, which Anadarko Petroleum Corp. will operate. The $385 million platform is on Mississippi Canyon Block 920.

Once installed, the 105-ft deep-draft semisubmersible floating processing unit will hold the record for being moored in the deepest water to date. Expected installation of the hub is the third quarter of 2006 with first gas production slated for 2007.

The project also includes the 24-in. Independence Trail pipeline for transporting the production 134 miles from the hub to the Tennessee Gas Pipeline in West Delta Block 68. Enterprise will own the pipeline and expects to install it early 2006 at an estimated cost of $280 million.

The hub initially will process gas from seven fields owned by Anadarko, Dominion Exploration & Production Inc., Kerr-McGee Oil & Gas Corp., Spinnaker Exploration Co., and Devon Energy Corp. The hub design allows it to accommodate up to 16 incoming flowline steel catenary risers.

The anchor fields include Atlas and Atlas NW (Lloyd Ridge Blocks 5, 49, and 50), Jubilee (Atwater Valley Blocks 305 and 349 and Lloyd Ridge Blocks 265 and 309), Merganser (Atwater Valley Blocks 36 and 37), San Jacinto (DeSoto Canyon Blocks 618 and 619), Spiderman (DeSoto Canyon Blocks 620 and 621), and Vortex (Atwater Valley Blocks 217 and 261 and Lloyd Ridge Blocks 177 and 221). Water depths of these fields range from 7,800 ft to 9,000 ft.

Vortex and Jubilee will flow to the hub through a single steel catenary riser, as will San Jacinto and Spiderman.