Oil and gas producers face formidable technical challenges as they venture into deeper water. The money that's involved can be considerable.
That message became apparent as two officials from companies heavily involved in Gulf of Mexico ultra-deepwater projects addressed the US Minerals Management Service's Outer Continental Shelf Policy Advisory Committee March 6 in Herndon, Va.
"It can cost $250 million to drill a single well, money which could be lost if it is not successful. That's the kind of financial risk oil companies are taking," said Cesar Palagi, Walker Ridge production asset manager at Petrobras America Inc. in Houston.
That doesn't include expenses for equipment, services and crews, added J. Keith Couvillion, deepwater land manager for Chevron North America Exploration and Production Co. in Houston. "We've seen increases in costs that have matched increases in oil prices. It costs $250,000/day just to rent a deepwater rig, not including services," he said.
'We detail every foot'
Ultra-deepwater E&P in the Gulf poses challenges because of water depths up to 8,000 feet, a salt canopy which covers most of the Lower Tertiary trend, and significantly higher pressure and temperatures, Couvillion told the committee. "Some of our wells take a year or longer before we actually start drilling. We detail every foot we drill and use real-time monitoring," he said.
There's still a lot to learn, he emphasized. "Especially in ultra-deep water, we don't have the kind of data points to drill the kind of wells we find on the shelf. There are cliffs and canyons out there which can make it difficult to place a platform and production system," he said.
Petrobras plans to bring the Floating Production and Storage Offloading system technology it developed for Brazil's offshore Campos Basin to the Gulf for the first time in the Cascade and Chinook fields 250 miles southwest of New Orleans, Palagi said.
Edge of technology
Wells which are planned there will be in water 8,000 feet deep and reach down as far as 28,000 feet, which essentially is the edge of current technology, he continued. "We don't have a regulatory framework to develop with some of the technologies that are being developed, so we are working closely with MMS to make certain the appropriate regulations are ready," he said.
"We don't have all the answers. We're just beginning to learn the questions. But we also have some of the brightest people in the world working on it. If there's crude oil out there, we'll find a way to produce it safely, reliably and with minimal environmental impact," Couvillion said.
Following the presentation, the committee's chairman, Victor G. Carillo, oil and gas division director at the Texas Railroad Commission, noted that several federal lawmakers have complained that companies' profits are excessive and need to be taxed further.
"I wish every member of Congress could have heard what you told us today," he told Couvillion and Palagi.
Contact Nick Snow at [email protected]