Debra Ferguson
Technology Editor
Independent reports by the US Energy Information Administration (EIA) and Wood Mackenzie Ltd. (OGJ Online, Oct. 15, 2012) predict a strong upswing in oil exploration and production in deepwater Gulf of Mexico (GOM) fields. These analyses use different assessment criteria but reach a similar conclusion: 2013 and beyond will be good times for GOM.
EIA report deepwater findings
EIA describes increased 2012 GOM production and identifies the fields that contributed to that increase. It also describes the rationale for expected increases in 2013 and beyond and identifies the fields expected to contribute to those increases.
Increased production in 2012
According to EIA, production in deepwater GOM increased to 1.39 million b/d from 1.31 million b/d during 2012. The increase arose from start-ups at 13 new fields (combined peak of 195,000 b/d), restart of Mad Dog field, and production from Tahiti Phase 2 redevelopment in 2012. EIA production data also include production from deepwater fields that began in 2011 but continued to increase production during 2012.
The following provides additional information about the fields contributing to increased 2012 production; Fig. 1 shows field locations.
Caesar field, operated by Anadarko Petroleum Corp., lies in 4,500 ft of water on Green Canyon Block 683. The field was discovered in 2006. Start-up occurred in March 2012; peak production of 20,000 b/d occurred in July 2012.
Cascade field, operated by Petroleo Brasileiro SA (Petrobras), started in February 2012 and reached peak production of 6,000 b/d in June 2012. It lies in 8,203 ft of water on Walker Ridge Block 206 and was discovered in 2002.
Chinook field, discovered in 2003, is operated by Petrobras. Production started in July 2012 and is to peak at 35,000 b/d in April 2013. Chinook lies in 8,826 ft of water on Walker Ridge Blocks 469 and 452.
Isabela field, on Mississippi Canyon Block 562, started in June 2012 and is to peak at 18,000 b/d in July 2013. Isabela, operated by BP PLC, lies in 6,500 ft of water.
Mandy field lies in 2,465 ft of water on Mississippi Canyon Block 199. Production started in June 2012 with peak production of 11,000 b/d in January 2013. LLOG Exploration Co. LLC discovered Mandy field in 2010 (OGJ Online, Mar. 3, 2010) and operates the field.
Morgus field, operated by ATP Oil & Gas Corp., started in February 2012 and reached peak production of 7,000 b/d in March 2012. Morgus lies in 3,937 ft of water on Mississippi Canyon Block 942 and was discovered in 1999.
Pyrenees field, operated by Newfield Exploration Co., started in February 2012 and reached peak production of 2,000 b/d in March 2012. It lies in 2,100 ft of water on Garden Banks Block 293 and was discovered in 2009.
Santa Cruz and Santiago fields, both operated by Noble Energy Inc., are part of the Galapagos development project (with Isabela field operated by BP). Santa Cruz, discovered in 2009, lies in 6,515 ft of water on Mississippi Canyon Block 563. Production started in Santa Cruz in June 2012 with peak production of 15,000 b/d in January 2013.
Santiago field, located on Mississippi Canyon Block 519, lies in 6,500 ft of water. Production started June 2012 and with peak production of 15,000 b/d reached in January 2013. Santiago field was discovered in 2011.
South Raton field, operated by Noble Energy, was discovered in 2007. It lies in 3,400 ft of water on Mississippi Canyon Block 292. Production started in February 2012; peak production of 4,000 b/d occurred in May 2012.
West Tonga field, operated by Anadarko, lies in 4,700 ft of water on Green Canyon Block 726. Production started in March 2012; peak production of 29,000 b/d occurred in May 2012. The field was discovered in 2007.
Wide Berth, operated by Apache Corp., was discovered in 2009. The field lies in 3,700 ft of water on Green Canyon Block 490. Production started in April 2012; peak production of 3,000 b/d occurred in May 2012.
Mad Dog field, operated by BP, had been offline since April 2011 but has restarted. The field lies in 5,000-7,000 ft of water on Green Canyon Blocks 825, 826, and 782.
Tahiti Phase 2 project, operated by Chevron Corp., started production in April 2012 and reached peak production of 30,000 b/d in November 2012. Tahiti lies in 4,017 ft of water on Green Canyon Block 640.
Despite the increased production, EIA notes that GOM production for 2012 was less than for 2011 as a result of Hurricane Isaac. The hurricane necessitated production shut-ins (OGJ Online, Aug. 29, 2012); it also caused development delays of some GOM locations, which delayed several start-ups originally scheduled for late 2012 into 2013.
Expected increase, 2013 and beyond
EIA notes that increased production expected in 2013 will result from new projects that started in 2012 and reached peak production in late 2012 or early 2013.
Six new fields are expected to start up in 2013 (combined peak production of about 45,000 b/d) and the start-up of Na Kika Phase 3 redevelopment project. Deepwater GOM production is expected to continue increasing in 2014 to an average of 1.45 million b/d.
Several high-volume deepwater projects expected to come on stream and contribute to this production include the Jack-St. Malo joint field development, Big Foot, Tubular Bells, and Lucius, as well as the Atlantis Phase 2 redevelopment project. EIA states that, although the expected combined peak oil production could be 300,000-350,000 b/d, start-ups scheduled for late 2013 may not reach peak volume until 2014.
The following provide additional information about developments expected to contribute to the increased GOM production. Fig. 2 shows the locations of these projects.
Bushwood (Noonan) field, operated by Helix Energy Solutions Group Inc., started February 2013 and is expected to reach peak production of 1,500 b/d in September 2013. The field, discovered in 2007, lies in 2,700 ft of water on Garden Banks Block 506.
Clipper field, discovered in 2005, started production in February 2013; peak production of 10,000 b/d is expected in September 2013. The field lies in 3,452 ft of water on Green Canyon Block 299 and is operated by ATP.
Dalmatian field, discovered in 2008, lies in 5,875 ft of water on De Soto Canyon Block 48. Production is expected to start in March 2014 and peak at 7,000 b/d in October 2014. Murphy Oil Corp. operates Dalmatian field.
Danny II, operated by Helix, started production in February 2013; peak production of 3,000 b/d is expected in September 2013. Danny II lies in 2,800 ft of water on Garden Banks Block 506.
Entrada field is expected to start producing in March 2014 and peak at 3,000 b/d in October 2014. Callon Petroleum Co. operates the field. Entrada was discovered in 2000 and lies in 4,642 ft of water on Garden Banks Block 782.
Goose field, operated by LLOG and discovered in 2003, lies in 1,548 ft of water on Mississippi Canyon Block 751. Production started at Goose field in February 2013; peak production of 5,000 b/d is expected in September 2013.
Knotty Head field, operated by Hess Corp., was discovered in 2005 in 3,557 ft of water on Green Canyon Block 512. Production started January 2013; peak production of 25,000 b/d is expected in August 2013.
Lucius field was discovered in 2009. It lies in 7,100 ft of water in Keathley Canyon Block 875, and is operated by Anadarko. The partnership in this venture includes Anadarko (35%), Plains Exploration & Production Co. (23.3%), Exxon Mobil Corp. (15%), Apache Deepwater (11.7%), Petrobras (9.6%), and Eni Petroleum Co. Inc. (5.4%). The field spreads across Blocks 874, 875, 918, and 919; Anadarko, ExxonMobil, and other owners entered a unitization agreement before beginning field development. Production is to start in September 2014 and peak at 70,000 b/d in April 2015.
Nancy field, on Garden Banks Block 506, is a discovery that underlies Noonan field. Production is to start in February 2013 and peak at 500 b/d in September 2013.
Na Kika Phase 3, operated by BP, is located in Mississippi Canyon. Production from this development is to start in September 2013 and peak at 40,000 b/d in April 2014.
Jack field, operated by Chevron, was discovered in 2004; it lies in 7,000 ft of water on Walker Ridge Block 759. Production is to start in January 2014 and peak at 50,000 b/d in August 2014.
St. Malo field, also operated by Chevron, lies in 6,900 ft of water on Walker Ridge Block 678. It was discovered in 2003. Production is to start in January 2014 and peak at 50,000 b/d in August 2014.
Big Foot field, discovered in 2006, is operated by Chevron. It lies in 5,000 ft of water on Walker Ridge Block 29. Production is to begin in June 2014 and peak at 50,000 b/d in January 2015.
Atlantis Phase 2 is operated by BP. This project is on Green Canyon Block 699 and lies in 6,133 ft of water. Production is to begin in September 2014 and peak at 50,000 b/d in April 2015.
Tubular Bells field, discovered in 2003, lies in 4,300 ft of water on Mississippi Canyon Block 683. Production is to start in June 2014 and peak at 40,000 b/d in January 2015. Hess operates this field.
Hadrian South field, operated by ExxonMobil, is on Keathley Canyon Block 964. Production from this field is to start in September 2014 and peak at 5,000 b/d in April 2015.
Fig. 3 shows both historical and planned startup activities in deepwater GOM with oil production data.
Wood Mackenzie report
The basis of the Wood Mackenzie report's increased E&P prediction is the high level of investment in GOM, as well as increasing opportunities and number of explorers. In the latest upstream outlook, Wood Mackenzie predicts a "new equilibrium" in 2013.
Lauren Payne, Wood Mackenzie GOM analyst for upstream research says, "The moratorium and exodus of several mobile offshore drilling units from deepwater GOM in 2010 sharply hindered drilling activity through 2011, but it has rebounded very well in 2012. We expect this trend to continue, driven primarily by development drilling as operators seek to boost production levels and bring new projects onstream."
Expected GOM investments
Wood Mackenzie notes that more than $20 billion will be spent on development well drilling for onstream projects through 2015. Wood Mackenzie expects production of the region to surpass the 2009 peak of 2 million boe/d in 2018 or 2019.
In terms of exploration, Wood Mackenzie expects the Gulf of Mexico "to remain a vibrant hub of activity in the long term," with more than $70 billion of expenditures made for exploration by 2030. These expenditures will result in discovery of more than 12 billion boe by 2030.
GOM opportunities, explorers
The level of opportunities in deepwater GOM ranges from small, low-risk prospects to large prospects in remote, harsh conditions. The deepwater GOM area has 46 operators, compared with 15 operators in the Angola-Brazil deepwater area. Wood Mackenzie also notes that, depending on terms arranged, the availability of unused processing capacity in GOM can add value for both hub owners and satellite operators.
The report predicts that by 2017, up to 70% of GOM processing capacity will be unused and that the demand for this capacity will arise from infill development and tiebacks. The value, however, will arise from "… operators monetizing their discovered resources or in the form of tariffs from third-party tie-backs."
In addition, Wood Mackenzie expects "an additional 2 billion boe of reserves… to be produced from subsea tie-backs from fields under development, probable developments, and those yet to be discovered by 2017." By then, Wood Mackenzie expects new third-party tie backs to generate an extra $200 million/year in tariffs
Future GOM E&P
EIA bases its predictions of future increased GOM production on field performance of currently producing fields and the anticipated performance of fields to be started up in the near future. The production history and trends derived from the production history indicate a bright future for GOM.
Wood Mackenzie assessed investment amounts planned for the GOM in the near future, area opportunities, and the number of explorers in the region. From this information, Wood Mackenzie predicts a bright GOM future.
That each of these reviews used different assessment criteria to reach a similar conclusion seems to strengthen the conclusion: Deepwater GOM may well be an exciting and profitable place to be for 2013 and beyond.
