SHELL MARKS PROGRESS IN DEEPWATER GULF

Nov. 13, 1995
Shell Offshore Inc. (SOI) has found that wells in its Gulf of Mexico Auger field have produced far beyond expectations. And the company is using Auger lessons to fine tune its deepwater exploration and production program. Shell began Auger oil and gas production in April 1994, using a tension leg platform (TLP) installed in 2,860 ft of water. That set a Gulf of Mexico production depth record, which Shell expects shortly to beat three times.

Shell Offshore Inc. (SOI) has found that wells in its Gulf of Mexico Auger field have produced far beyond expectations.

And the company is using Auger lessons to fine tune its deepwater exploration and production program.

Shell began Auger oil and gas production in April 1994, using a tension leg platform (TLP) installed in 2,860 ft of water. That set a Gulf of Mexico production depth record, which Shell expects shortly to beat three times.

"SOI's deepwater gulf strategy is very similar to the development program for the North Sea," said Rich Pattarozzi, general manager of the company's deepwater division. "We are putting in infrastructure to develop big discoveries, and we will tie in smaller ones as subsea developments later."

Pattarozzi reckons technologies currently in development can be applied to discoveries in water more than 5,000 ft deep. "But we may need to do things differently beyond 6,500 ft."

Pattarozzi's unit is responsible for exploration and production in water more than 1,500 ft deep. Beyond that depth, he said, conventional technology ends. TLPs, subsea completions, and floating production systems are the chief options.

THE SETTING

"SOI is the leading operator in the Gulf of Mexico and the leader here in deep water," Pattarozzi said. "We also have an extensive shelf exploration program."

SOI produces about 175,000 b/d of oil and 1.2 bcfd of gas from the Gulf of Mexico. Tile company owns 627 offshore leases there - more than any other operator - covering a total 3.5 million acres.

SOI has 52 producing fields, with 84 platforms and a total 828 producing wells. Production will rise, due largely to a deepwater development program.

In the deepwater Gulf of Mexico, industry holds 1,413 leases, of which SOI owns 406. The industry has drilled 183 wildcats in the gulf's deepwater area, of which SOI has drilled 46.

Pattarozzi said estimated reserves of 3-4 billion bbl of oil equivalent (BOE) are in discoveries announced by industry to date, while there is an estimated 7-8 billion BOE yet to be discovered in the gulf's deep water.

SOI's early deepwater discoveries were Auger in 1987 and Mars in 1989. The industry has so far notched up 35 discoveries in gulf waters deeper than 1,500 ft, of which SOI is involved in 17.

Berend Van Hoorn, SOI chief geologist, said the company's deepwater Gulf of Mexico reserves amount to 1.5 billion BOE, while other companies have found a total 1.7 billion BOE.

These discoveries have been made during the last 12 years, but in the shallower waters of the gulf's shelf area 850 fields have been discovered since the 1950s. Estimated reserves for these fields amount to 12 billion bbl of oil and 140 tcf of gas.

"Reserves in the gulf's deepwater area have been found in a few big fields," Van Hoorn said, "in contrast to the many small discoveries in the shallows.

"The Gulf of Mexico deep water is a very underexplored region, but the oil industry has realized this, judging by the number of leases purchased of late."

SOI DEVELOPMENTS

SOI has announced development of six of its deepwater discoveries. Auger and Tahoe are on production, Popeye, Mars, and Ram/Powell are under development, and Mensa, a subsea development in 5,400 ft of water, will set the world deepwater production mark, (13394 bytes).

SOI has also formed a joint venture, with BP Exploration Operating Co. Ltd. 23% and Conoco Inc. and Exxon Corp. each 16%, to evaluate development options for the Ursa discovery.

Estimated reserves are Tahoe with 130 million BOE in gas and liquids, Auger 220 million BOE in oil and gas, Popeye 320 bcf of gas and 3 million bbl of condensate, Mars 700 million BOE in oil and gas, Ram/Powell 260 million BOE in oil and gas, and Mensa 720 bcf of gas.

Ursa, in 3,950 ft of water, is estimated to hold reserves of more than 220 million BOE in oil and gas. It is likely to be a TLP development. SOI plans to drill an Ursa appraisal well this year.

Tahoe went on stream in January 1994, and Auger started production in April 1994. Of developments in progress, Popeye is slated for first production in November 1995, Mars in July 1996, Ram/Powell in August 1997, and Mensa in October 1997.

Ursa, not yet approved for development, is expected on stream in 1999.

TLP LESSONS

Auger's TLP development program taught SOI a number of lessons that Pattarozzi said are keys to successful development of deepwater Gulf of Mexico discoveries.

Auger helped show that the gulf holds world class reservoirs in deep water, but control of development costs is crucial.

"Before Auger," Pattarozzi said, "conventional wisdom had it that Gulf of Mexico wells could not be expected to produce more than 3,500 b/d. But when we started to develop Auger, we became convinced that high rate wells were a necessity."

Pattarozzi said a development well drilled from the TLP recently went on stream at an average 13,500 b/d. He said there is no reason deepwater Gulf of Mexico wells cannot produce 30,000 b/d.

Tom Bourgeois, manager of producing operations for SOI's deepwater division, said minor improvements to the Auger TLP design will be made for TLPs being built for Mars and Ram/Powell.

For example, Auger's 12 tendons are fixed to the seabed by four templates, whereas Mars and Ram/Powell will be fixed by single pile foundations with no templates.

Similarly, Auger has a lateral mooring system and a fixed drilling rig. The TLP can be moved about 240 ft from the center of the well pattern to drill development wells. Mars and Ram/Powell will have skid-mounted drilling rigs. So the rig can be moved without moving the TLP for development drilling.

Auger's 25,000 metric ton topsides were mounted on a single deck. This was installed by ballasting the hull and sliding the topsides over the hull on a barge pulled in between the columns. The hull was then deballasted to take topsides weight off the barge.

Mars and Ram/Powell, on the other hand, will have modular decks, allowing the topsides to be assembled with the aid of a crane barge. This will allow assembly in shallow water, where work is less affected by weather.

Nine production wells have been drilled in Auger field, although only six are on production. The platform can handle 32 wells.

"We are now producing significantly more than the platform's design capacity of 46,000 b/d of oil," Bourgeois said. "We have debottlenecked to 65,000 b/d and hope to reach 70,000 b/d next year."

Gas production is about 130 MMcfd. Ultimately, SOI hopes to boost Auger production to 100,000 b/d, but this will require installation of a third production train on the platform.

RIG CONTRACTS

SOI is drilling a wildcat 10 miles south of Auger using the Sonat Rather rig and expects to drill another next year into a target 5 miles southeast of the TLP.

SOI in mid-October let additional contracts to Sonat Offshore Drilling Inc., Houston, for use of the Sonat Rather and Sonat Richardson. Both are fourth generation, deepwater semisubmersible rigs, and both are working under present contracts with SOI.

Under the latest constracts, Shell hired the Richardson for as long as 5 years starting in February 1996. The first 2 years of the contract term are guaranteed. The Rather's new contract is for as long as 2 years starting in mid-1996, with the first year guaranteed.

The guaranteed term of the contracts should generate revenue in excess of $114 million, Sonat said. The rates for the first year are fixed. Rates for the second year are to be adjusted, within preset limits, off the first year's rate based on then existing market conditions.

One of the wells drilled from the Auger platform was a wildcat that resulted in a small discovery called Cardamom. An appraisal well is to be drilled in Cardamom next year.

"Our goal is that all SOI infrastructure will be used to maximum capacity," Pattarozzi said. "Our wildcats are all targeting nearby reservoirs that can be tied back to Auger.

"Our current thinking is that 15 miles is the subsea tie- back limit for an oil find in this area, while the limit for a gas discovery here would be 60 miles."

Shell's Mars discovery lies in 2,940 ft (13394 bytes) of water on Mississippi Canyon Block 807. Lou Wilkerson, SOI's Ram/Powell project manager, said Mars will be developed for an estimated $1.2 billion, the same as Auger, but the Mars TLP will have a production capacity of 100,000 b/d of oil and 110 MMcfd of gas.

The Mars TLP will be able to handle 24 wells from the platform plus two subsea tie-back wells.

Ram/Powell development is expected to cost $1 billion, with a TLP in 3,220 ft (13394 bytes) of water able to produce 60,000 b/d of water and 200 MMcfd of gas.

"Based on learnings from Auger and the earlier Bullwinkle fixed platform development," Wilkerson said, "we can bring on improved production rates, earlier production, and lower costs."

Auger's development program took more than 5 years from design to startup, while Mars and Ram/Powell are expected to take a little more than 3 years.

Key to shortening development times were overlapping of design and fabrication processes, inshore platform assembly through use of deck modules, and similarity of design that allowed copying.

Auger's export pipelines tie back to infrastructure on the Gulf of Mexico's shelf. Mars will need a new pipeline because its oil is relatively sour, while Ram/Powell will be tied into the shelf export network.

SUBSEA FIELDS

Pattarozzi said SOI's strategy for Gulf of Mexico subsea field developments involved three strands: stepwise testing of technologies; limited exposure to capital risk; and "learn while you earn" developments under phased plans.

Doug Peart, subsea projects manager for SOI, said 67% of the company's deepwater reserves could be developed by TLP or "hub" technologies, while 33% could be recovered with subsea developments.

The company has started by building experience through development of Tahoe and through a technology exchange agreement with Brazil's Petroleo Brasileiro AS (Petrobras).

The step-wise approach via Tahoe and Popeye will lead to development of Mensa setting a new mark for production water depth and most likely for subsea development farthest from a host platform, at 60 miles away.

SOI started production from Tahoe field in January 1994, using a single subsea wellhead tied back to Shell's Bud platform 12 miles away on Main Pass Block 252.

Tahoe, in Viosca Knoll Blocks 783 and 827, was developed by means of a refurbished subsea tree originally used by Placid Oil Co. to develop Green Canyon 29 field.

This first phase development in Tahoe was said to have cost $27 million, and to have produced at a rate of about 30 MMcfd of gas and 1,000 b/d of condensate.

Last August, SOI began drilling four wells - three gas producers and one for oil - using the Concord semisubmersible rig.

Popeye lies in 2,000 ft of water (13394 bytes) on Green Canyon Block 116. Peart said Popeye is a stepping stone between the Tahoe and Mensa developments.

A subsea manifold will be installed between the two sections of the Popeye reservoir, with production initially slated to come from one well in each of the reservoir sections.

Each well is expected to produce 60 MMcfd of gas, which will be exported to Shell's Cougar platform 26 miles away, making it the longest offset in the Gulf of Mexico.

"We performed system integration tests during the summer," Peart said, "and we are installing Popeye now. We are in the process of completing the first well."

Mensa, in 5,400 ft of water (13394 bytes) on Mississippi Canyon Blocks 686, 687, 730, and 731, will exceed today's record for deepwater production by almost 2,000 ft. It is expected to yield 300 MMcfd of gas, a 25% increase over SOI's current gas output.

Shell has let contract to Allseas Marine Contractors SA of Switzerland to lay a 12 in. Mensa oil pipeline. The line, more than 60 miles in length, will run between West Delta Block 143 and Mississippi Canyon Block 685, crossing one third party pipeline, with water depths ranging from 371 ft to 5,412 ft. Laying rigid pipe in 5,412 ft of water will set an industry record.

A pipeline end manifold also will be installed on Mississippi Canyon Block 685.

Allseas' Lorelay pipelay vessel will perform the work next year, using conventional S-lay. The stinger will be lengthened to give the pipeline a steep departure angle and thus reduce stress on line pipe.

Mensa development cost is expected to be $230-290 million, depending on its number of wells. As many as four subsea wellheads will be connected by flow lines to the West Delta 123 platform, which lies on the shelf 68 miles away.

SOI said the Mensa connection will be the world's longest tieback and will represent an important technological advancement in linking deepwater fields to shelf infrastructure.

Peart said Mensa will approach the current feasible depth limit for subsea development. He estimates the barrier at 6,000 ft of water, where the pressure is so high it will hinder the operation of control systems.

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