EDITORIAL New industry in the gulf

So much is happening in the Gulf of Mexico that it's easy to overlook important landmarks. And broad implications of the region's revival tend to get swamped in the flood of news.

Two important landmarks occur this month.

Flow is set to start through the world's first production spar, Neptune, operated by Oryx Energy Co. Spar technology, developed by Deep Oil Technology and Spars International Inc., was crucial to economics of the field, which lies in 1,930 ft of water. The Neptune spar can handle production of 25,000 b/d.

A second production spar is under construction for a field operated by Chevron USA Production Co. on Green Canyon Block 205. The water depth there is 2,600 ft. Unlike Neptune, the Chevron spar, Genesis, will accommodate drilling as well as production.

Mahogany starts

In the other landmark, Phillips Petroleum Co. and partners began production from the gulf's first commercial subsalt discovery, Mahogany. Flow started from the first of four wells to be drilled prior to completion of the platform and pipeline. Output for 1997 will average 22,000 b/d of oil and 33 MMcfd of gas.

These developments mark progress in three major trends in the gulf. As the special report beginning on p. 37 shows, the trends have revived activity and made opportunities in the Gulf of Mexico globally competitive once again.

The spars represent one of many technologies enabling companies to drill, complete, and produce from wells in rapidly increasing water depths. The deepwater gulf play is important not just because of the physical activity it represents but also because it enlarges the explorable resource. Technological advance creates opportunities.

Similarly, new sedimentary volumes come into play as the industry learns how to accurately position seismic reflections from beneath subsurface layers of salt. The Mahogany discovery confirmed the potential of this exciting technical frontier and touched off another important play in the gulf. Eventually, the technology will find use in other parts of the world where salt hampers seismic interpretation.

The third broad trend in the gulf is the important role now played by independent producers. To some extent, the role derived from movement of major companies away from the U.S. in the late 1980s and early 1990s. The majors left behind not only prospects appealing and now affordable to independents but also infrastructure developed during 4 decades of production.

But growth in gulf activity by independents amounted to more than replacement of the majors on the coastal shelf. It, too, strongly reflected technology, which in recent years has become increasingly accessible to savvy independents. With small companies now competitive in lease sales and active on the slope as well as the shelf, the gulf has become a rich blend of skill, efficiency, and scale.

The gulf's revival, then, is something more than what might have occurred if, say, oil and gas prices had doubled. A price spurt would have stimulated development of hydrocarbon accumulations known to exist but too costly to exploit under previous price projections, and exploration for more of the same.

Propelled by technology rather than price, this revival is something much different. On nearly all fronts, it is stimulating activity in technical and geological realms previously daunting or altogether unknown.

The new industry

It is a new oil and gas industry at work in the Gulf of Mexico, an industry able to work in new ways and with new efficiency. It is an industry much different from its clanky past and much different from most popular and political characterizations of it.

For the sake of future access to natural resources and future marketability of its products, the industry needs to change those characterizations. It must show how it has modernized from technology, upstream and downstream, in the office and in the field. The gulf provides an excellent showcase.

Copyright 1997 Oil & Gas Journal. All Rights Reserved.