Feature ArticleEngineering, Subsea Technology Drive Ultradeepwater Activities
By Susanne Pagano
Advances in engineering and subsea technology enable oil and gas operators worldwide to tap energy reserves in challenging environments, including ultradeepwater regions of the Gulf of Mexico, Brazil and West Africa.
Major and independent operators are expected to spend a record $723 billion in exploration and production in 2014, a 6.1 percent increase from expenditures in 2013, Barclays Capital Inc. reported. Spending plans are based on a Brent crude oil price of $98 per barrel, West Texas Intermediate crude at $89 per barrel and a U.S. natural gas price of $3.66 per million British thermal units. Barclays analysts believe spending will shift away from large infrastructure projects toward greater drilling, evaluation and completion activity. This will drive demand for drilling rigs, field and subsea services, production equipment and related oil and gas services.
The mobile offshore drilling rig count points to robust activity in the global market. Early in the year, worldwide utilization of 774 marketed rigs was 94.2 percent, slightly ahead of the rig count a year ago, energy information specialist IHS Petrodata (Houston, Texas) reported. In the U.S. Gulf of Mexico, 94.1 percent of the region's 85 marketed rigs were under contract. Rig utilization was at 100 percent in South America and Northwest Europe, and was more than 90 percent in West Africa and the Middle East.
Semisubmersibles rated to drill in water depths more than 7,500 feet are working at daily charter rates from $500,000 to $555,000 in the Gulf of Mexico, IHS Petrodata reported. The same type of semi was commanding $600,000 offshore West Africa.
Semis in the U.S. Gulf rated for water depths from 5,000 feet to 7,500 feet were chartered at daily rates of around $475,000. The same class semisubmersibles were fixed at $375,000 a day offshore Brazil and $440,000 in waters off West Africa. Jackup rigs drilling in the North Sea worked at charter rates from about $175,000 to $425,000 a day, depending on individual rig specifications and location.
High-Tech Rig Fleet Expansion
Several high-specification rigs are soon expected to join the U.S. domestic fleet. One rig is Rowan Companies' (Houston) ultradeepwater drillship, the Rowan Resolute, rated to drill in 12,000 feet of water. Built by Hyundai Heavy Industries in Ulsan, South Korea, the rig is slated for delivery in June. Another Rowan rig, the jackup Joe Douglas rated to drill in 375 feet of water, also will be based in the U.S. Gulf following early year inspections.
A relative newcomer, Mexican drilling contractor Integradora de Servicios Petroleros Oro Negro (Mexico City, Mexico) is operating a new high-specification, high-performance deep drilling jackup for Pemex (Mexico City) offshore Mexico. The Pacific Class 400 jackup, named Fortius, is capable of operating in waters up to 400 feet and is equipped for improved drilling efficiencies. The rig is suited to drill high-pressure, high-temperature wells to depths of 30,000 feet. The rig was completed at PPL Shipyard Pte. Ltd. (Singapore). Two sister rigs will join Oro Negro's fleet next year.
Ensco plc (London, England) has taken delivery of Ensco 121, the second of four ultrapremium, harsh-environment jackup rigs in the contractor's Ensco 120 design series. The rig is headed to the North Sea for a charter beginning in the second quarter at an approximate day rate of $230,000. Ensco will take delivery of another rig in the series during the third quarter, and the unit will drill in the same region. The 120-series jackups are capable of operating in up to 400 feet of water and drilling ultradeep gas programs or ultralong reach wells up to 40,000 feet.
The rig ordering trend includes four ultradeepwater drillships with two jackups for Seadrill (Houston). Maersk Drilling (Copenhagen, Denmark) will begin the initial three-year-plus-options contract for the newbuild deepwater drillship Maersk Valiant with ConocoPhillips (Houston) and Marathon Oil (Houston) for their respective drilling programs in the Gulf of Mexico. Maersk's contract is valued at an estimated $694 million, including mobilization costs from the Samsung Heavy Industries yard in Geoje, South Korea. The drillship's features include an advanced positioning control system and new automation features.
Transocean Ltd. (Zug, Switzerland) is building five Super B 400 Bigfoot Class jackups at Keppel FELS Ltd. (Singapore) at a combined capital cost of an estimated $1.2 billion. The first rig in the multiunit order should be delivered in about two years. Some of the current worldwide rig orders likely will replace aging older generation rigs, some of which were constructed more than 30 years ago.
Domestic, International Projects Abound
The list of key domestic and international projects is expanding, oil and gas operators report. Strong oil prices coupled with more attractive natural gas prices have improved well economics and prompted investment.
One epic project is Shell Oil Co.'s (Houston) new production from Mississippi Canyon's Mars B development through the giant Olympus tension-leg structure, the company's seventh and largest floating deepwater platform in the Gulf of Mexico.
According to Shell, Mars B is the first deepwater project in the Gulf to expand an existing oil and gas field with significant new infrastructure. Olympus is projected to extend the life of the greater Mars basin to 2050 or beyond. Olympus and the original Mars platforms are expected to deliver an estimated resource base of 1 billion barrels of oil equivalent.
Another Shell Oil project, the new Cardamom field, is scheduled to begin initial production later in the year. Work also is in progress on the operator's deepwater Stones field, a prospect expected to produce around 50,000 barrels of oil equivalent per day.
BP America (Houston) and partners are focusing attention on the recently announced Gila oil prospect in some 4,900-feet of water in the Gulf's Keathley Canyon offshore Louisiana. Further drilling will be required to determine the ultimate size of the discovery and test the potential for material additional pay in deeper zones not penetrated in the discovery well. BP called the discovery a further sign that momentum is returning to the company's Gulf of Mexico operations following the Deepwater Horizon accident four years ago.
Another project ramping up in the Gulf of Mexico is Anadarko Petroleum's (The Woodlands, Texas) Shenandoah prospect that encompasses three discoveries—the Shenandoah-2 appraisal well, Coronado and Yucatan. Appraisal wells are in progress on Coronado and Yucatan; a rig has committed to drill a Shenandoah delineation well.
Deepwater advancements are behind dozens of other significant Gulf of Mexico field developments, including another Anadarko project—a truss spar under construction for the Heidelberg field in 5,300 feet of water.
Deepwater prospects due onstream soon include Chevron's (San Ramon, California) Jack/St. Malo offshore Louisiana. Hess Oil (Houston) expects initial production to begin in the third quarter for the $2.3 billion Tubular Bells development in 4,300 feet of water. Hess also is in the predevelopment stage for the Stampede field with sanction decision targeted before year end. Wood Group Mustang (Houston) is providing front-end engineering design services for Stampede's tension-leg platform.
FMC Technologies (Houston) is proceeding with a new three-year contract with Mexico's Pemex for the manufacture and supply of surface wellheads to support its drilling and well maintenance programs in the Gulf of Mexico. If all of the equipment is ordered, the award will be valued around $64 million, the company reported.
FMC added another order, valued at an estimated $720 million, to supply subsea systems for a major deepwater Indonesian development operated by Eni (Rome, Italy). The award for the Jangkrik field includes subsea trees, manifolds, jumpers and connection systems, umbilicals, tooling and associated topside and subsea control systems.
Petrobras (Rio de Janeiro, Brazil) and a group of partners including Shell and Total Petroleum (Paris, France) approved an investment plan for the ultradeepwater Libra field. Planned activities include seismic processing for the entire block, drilling two wells starting in the second half of the year, studies for a new seismic survey using high-end technology and an extended well test at the end of 2016.
Elsewhere in Brazil, engineering, project management and construction specialist Technip (Paris) was tapped to supply flexible pipes for the Sapinhoa Norte field and the 15 wells at Lula field, formerly called Tupi, at a water depth of up to 8,200 feet. The pipes will be for oil production, gas lift and gas injection.
Technip further announced a joint venture with China Offshore Oil Engineering Co. Ltd. (Beijing, China), the largest offshore engineering and construction company in China. The five-year accord combines know-how and technical resources to target deepwater engineering procurement, construction and installation of subsea umbilicals, risers and flowline projects offshore China. The consortium is developing the China National Offshore Oil Corp.'s (Beijing) Panyu 34-1/2 development in the South China Sea.
In West Africa, Technip secured a significant $1.23 billion contract for flowlines and related subsea equipment for the huge TEN project—the Tweneboa-Enyenra-Ntomme development—operated by Tullow Oil plc (London, England) and several partners. With first oil expected in 2016, the project will require drilling and completion of up to 24 development wells that will be connected through subsea infrastructure to a floating production, storage and offloading vessel moored in about 4,900 feet of water.
A subsidiary of McDermott International (Houston) is proceeding with a $200 million engineering, procurement, construction and installation project for a client in the Arabian Gulf. Workscope will include two production deck modules, observation platforms, subsea pipelines and submarine power and fiber-optic cables.
On the production side, new floating production, storage and offloading vessels are in progress. One is Petrobras's floating production, storage and offloading facility Cidade de Iihabela, a converted oil tanker, which is scheduled to operate in the deepwater Sapinhoa field concession offshore Brazil in the second half of 2014. The production unit will have the capacity to store up to 1.6 million barrels of oil. Several FPSOs already are located in the field, where water depths top 7,000 feet.
Susanne Pagano is a contributor to Sea Technology.