Abandonment looms for fields off California

One of the most frustrating chapters in Chevron Corp.'s more than 40-year association with drilling and production off California is coming to an end sooner than expected.

Faced with smaller-than-expected reserves, Chevron and other leaseholders of Point Arguello field in the Santa Barbara Channel have agreed to unitize it, making Chevron U.S.A. Inc. the operator for seven other companies.

That follows years of delays from lawsuits and permit wrangles in bringing the ill-fated project on stream to disappointing results.

It also is a key step to keeping the project profitable while abandonment looms for it only 3 years or so from now.

Meanwhile, another chapter is opening in abandonment of offshore oil and gas fields on state leases in the Santa Barbara Channel.

A group of six oil and gas companies is about to begin a 19-month offshore abandonment project that will involve 23 subsea completion wells and abandonment-in-place and partial removal of 47 flow lines that connect the wells to onshore storage and processing facilities along the southern coast of Santa Barbara County.

Arguello operations

Chevron currently operates Platforms Hermosa and Hidalgo, and unitization-approved by the federal Minerals Management Service in late November-adds Texaco Exploration & Production Inc.'s Platform Harvest to the mix.

The leaseholders originally estimated Point Arguello would yield as much as 500 million bbl of oil, but in 1996 realized recoverable oil is probably less than 200 million bbl, said Vega Sankur, Chevron's asset team leader.

Unitization "opens up more opportunities" to save money via single management of the field, Sankur explained, plus reducing operating costs and extending the life of the field.

Sankur said unitization would result in better reservoir management, savings of about $3 million/year, and more orderly abandonment.

Although Point Arguello started out in 1991 producing about 80,000 b/d of oil, it now averages about 30,000-40,000 b/d. Harvest accounts for about 19,000 b/d of the field's production.

Chevron is currently using a modular rig to redrill more wells, and "unitization makes those projects more economic, so we're doing more of them," Sankur said.

Other partners besides Chevron and Texaco include: Phillips Petroleum Co., Pennzoil Exploration & Production Co., Oryx Energy Co., Koch Industries Inc., Oxbow Energy Inc., and Whiting Petroleum Co.

Arguello background

Not long after Chevron discovered Point Arguello field in March 1981 in federal waters 10 miles off Point Conception, the field was hailed as the largest ever found in U.S. federal waters.

A Chevron official at the time estimated reserves at 300-500 million bbl.

It was thought development of the field could yield as much as 160,000 b/d of oil and 160 MMcfd of gas, making the field California's top producing field.

It took 10 years and $2.5 billion after the discovery before Point Arguello was brought on stream on May 17, 1991; Chevron now foresees only about 3 more years before Point Arguello is shut down.

Plans already are being made for the abandonment. Removal of Arguello's platforms will be more complex than Chevron's removal last summer of Platforms Hazel and Hilda in Summerland field and Platforms Hope and Heidi in Carpinteria field in the Santa Barbara Channel. Arguello's platforms are larger and in deeper water.

Almost from the beginning, the Arguello project was challenged by regulatory delays, fierce political opposition, lawsuits, and nonstop wrangling. Dozens of federal and state permits were required.

There was a dispute over how the oil would be transported to refineries. The project was also delayed by questions about safe transport and processing of the natural gas, which contains hydrogen sulfide.

The first well to go on line in May 1991 was No. C-4 on Chevron's Platform Hidalgo. The well flowed 6,000 b/d. The tract on which the platform was installed was OCS-P 0450, which Chevron and Phillips jointly acquired at a federal lease in May 1981 for a bonus of $333.6 million, or $65,014/ acre, representing an all-time high for an offshore tract.

Additional wells were brought on production from Chevron's Platform Hermosa and Texaco's Platform Harvest. Within 5 months, production climbed to 40,000 b/d, moving Arguello into sixth place among California's top 10 fields.

Production peaked at 85,000 b/d in 1993, with 26 producing wells averaging almost 3,300 b/d/well. The field moved into fourth place in California, topped only by Midway-Sunset, South Belridge, and Kern River.

Decline set in. Point Arguello field now produces only about 45% of its peak output in 1993, or about 38,240 b/d.

Sandy Cornelius, Chevron's Ventura profit center manager, said the company now believes it will get only 140 million bbl by the time it shuts down around the turn of the century. "Our challenge is to stay profitable until then," Cornelius said.

With demise of the Point Arguello field, Ray Galvin, president of Chevron U.S.A. Production Co., said, "I can't think of a situation in which we would invest in another project offshore California."

Channel abandonment

ARCO Oil & Gas Co., CalResources LLC, Chevron USA, Phillips, Texaco, and Unocal Corp. are undertaking the abandonment project in compliance with State Lands Commission (SLC) lease provisions.

Those provisions require lessees "to remove all platforms, fixed or floating structures" and "restore the premises" on expiration of leases or termination when production ceases.

The project involves nine state leases from Summerland northwest to Point Conception. Fields involved, discoverers, and year of discovery are:

Summerland offshore oil, Chevron, 1957.
Gaviota offshore gas, Chevron, 1960.
Conception offshore oil, Phillips, 1961.
Alegria offshore oil, ARCO, 1962.
Caliente offshore gas, Chevron, 1962.
Molino offshore gas, Shell, 1962.
Point Conception offshore oil, Unocal, 1965.

Cumulative production from the fields is 54.4 million bbl of oil and 467.5 bcf of gas. None of the fields is now producing.

The subsea well abandonment and flowline removal program involves two phases: permanent abandonment of subsea completion wells and abandonment-in-place and partial removal of flowlines.

Operators received Coastal Commission approval for the project in March-April 1996. SLC, lead agency for the project, gave its approval in October 1995.

Abandonment procedures

Operators plan to use a jack up, scheduled to arrive as early as mid-March, to plug wells. After each well is capped, the rig will move to the next subsea well.

Abandonment of wells is expected to take about 12 months, with order of abandonment to be determined by weather and operating conditions. Shallowest water is about 65 ft off the Summerland coast. Deepest water is 275 ft off Point Conception. Distance from shore varies from 1,200 ft off Point Conception to 13,800 ft off Gaviota.

Abandonment-in-place/removal of 47 flowlines will take place at four sites during a 12-month period separate from well abandonment in accordance with Air Pollution Control District permit restrictions. Flowlines will be removed from the nearshore area from at or above the mean high tide line to the 15-ft depth about 500 ft offshore. Pipelines will be abandoned in place from the 15-ft water depth to plugged wells offshore.

Companies are completing pre-abandonment surveys to identify hard bottom and kelp resources in areas that could be disturbed due to the jack-up rig and support vessel operations. Based on survey results, operations will prepare anchoring handling plans for Santa Barbara County review and Coastal Commission approval. Meanwhile, companies are pressure testing and flushing flowlines in preparation for abandonment.