Why Louisiana is the obvious choice for Mexico’s deepwater drilling base

Writing about Harvey Gulf International Marine’s massive and innovative multi-purpose service vessel (MPSV), the Harvey Sub-Sea, destined for work in the far-offshore U.S. Gulf of Mexico, for the July issue of WorkBoat Magazine, got me thinking about the future of oil drilling in the Gulf.

Almost exactly a year ago, I wrote about Mexico’s new laws allowing foreign operators to drill in Mexican waters. Recent news of deepwater lease sales to BHP Billiton and the opening of the Chachiquin block, adjacent to the Mexican-government-owned Nobilis-Maximino Block, that could produce 80,000 barrels per day, prompted me to take another look at the Mexican oilfield’s potential impact on the U.S. oilfield-service industry.

Mexico’s national oil company, Pemex, has controlled the Mexican oilfield, both ashore and offshore, since its inception. With offshore structure support based on the small island of Carmen in the Bay of Campeche, the Mexican oilfield has thrived — no easy task in the face of endemic inefficiency and corruption that mirrors that which has always infected Mexican politics. Why? The shallow-water, shallow-drilling-depth Bay of Campeche does not punish poor performance as rigorously as the deepwater, 30,000-foot-drilling-depth waters of the central Gulf of Mexico.

As a result, Mexico had not, until recently, attempted to access its deepwater resources, even as U.S. drilling has crept toward — and onto — the boundary between the waters of the two countries. Anadarko is presently developing its Lucius Field within 20 miles of the boundary, approximately 200 miles from both the U.S. and Mexican coasts.

In 2015, the Mexican government realized that, in spite of the blow to national pride, it was going to have the change the monopolistic laws that prevented foreign participation in its oilfield. This opened the way for foreign oil companies — which to date have included Statoil, BP, and Total SA, with Shell expressing strong interest — to partner with Pemex.

One challenge the Mexican government will face is providing the kind of infrastructure the deepwater, far-offshore oilfield requires. U.S. OSVs have 70 years of experience at this. Modern OSVs, reaching 350’ in length, grossing up to 8,000 GRT, and drawing 25’ fully laden, have proven themselves capable of sustaining the middle-of-the-Gulf oilfield in virtually any sea and weather condition. If lesser vessels could safely and continuously supply these rigs, then the modern giants wouldn’t be necessary (and couldn’t be supported on the highly competitive day rates prevalent in the industry). But they can’t, and this presents a problem in supplying the nascent Mexican far-offshore oilfield from Mexican ports.

The present ports are few and far apart, serviced by two-lane roads over great distances in varying states of repair. Mexico’s only oilfield port, Ciudad del Carmen, with its present draft restriction of 13’, would have to be extensively dredged before it could accept the vessels that the majors would insist on using in such an oilfield. Such dredging would face serious natural difficulties considering the long, shallow limestone shelf that has long prevented its development

The Mexican port directly on the Gulf, Progreso, is essentially an open roadstead, and development would face the same obstacles as , Ciudad del Carmen, plus the problem of congestion at its present container-vessel docks. Coatzacoalcos, at the bottom of the Bay of Campeche, is primarily a tanker port, and is too far away from the prospective deepwater oilfields to be practical, anyway. So it is intuitive that, with the new laws permitting it, the major oil companies would consider supplying their Mexican deepwater operations from the U.S. Gulf Coast.

First, the region offers a highly developed infrastructure dedicated to supplying both the offshore oilfield, from the bays and marshes of Texas and Louisiana to the ultra-deepwater floating rigs in the center of the Gulf, as it has been doing since the world’s first offshore rig, the Mr. Charlie, began drilling in 1954. The road system, including I-10 between Houston and New Orleans, offers fast and efficient transportation from the oilfield-equipment manufacturing centers to the region’s major oilfield ports.

Further, the major oilfield suppliers of cementing services, pipe and casing, mud, downhole tools, pumps, valves, and rig/platform/vessel construction and repair services all have facilities in these ports, including repair drydocks and even new-construction shipyards. To develop any port in Mexico, beyond the aforementioned challenges, would require developing all of these facilities along Mexico’s remote Bay of Campeche or on its barren and unprotected Yucatan coastline.

On the other hand, at least for the eastern portions of any future Mexican deepwater oilfield, Port Fourchon would serve as an almost-ideal base of operations. Free of the constrictions and restrictions that face Louisiana’s other oilfield ports such as Houma, Morgan City, and Intracoastal City, Port Fourchon was created as a dedicated oilfield port in the center of a huge marsh 60 miles south of New Orleans, within sight of open water by dredged channel. Although it languished during the 80’s, with the oilfield downturn, it mushroomed in size and capabilities during the following two decades, and now serves as the hub for the U.S. far-offshore oilfield.

In addition to being far from any residential areas (other than the pricey lodges sportfishermen have built around the edges of the port), it is capable of vast expansion due to the fact that it is completely surrounded by miles of easily dredgeable marsh. In fact, all of the dry land in Port Fourchon was created by dredging the wide channels that comprise the port. And without the residential areas that limit the activities and expansion of facilities in most other existing oilfield ports on the Gulf Coast, Port Fourchon offers manufacturers, shipyards, and suppliers the ability to conduct any operation the oilfield requires without excessive regulatory and social interference.

A final note on the suitability of Port Fourchon for further development: the present downturn in the far-offshore oilfield has severely affected Port Fourchon. Shallow-water operations are best supported from smaller, closer bases, and the cost of deepwater operations vs. the price of oil has significantly reduced the number of ultra-deepwater operations in the U.S. Gulf.

About the author

Capt. Max Hardberger

Max Hardberger is a maritime attorney, flight instructor, writer, and maritime repo man. He has been a correspondent for WorkBoat since 1995. His memoir, Seized: A Sea Captain’s Adventures Battling Scoundrels and Pirates While Recovering Stolen Ships in the World’s Most Troubled Waters, was published by Broadway Books in 2010. He’s appeared on FOX, The Learning Channel, National Public Radio and the BBC, and has been the subject of articles in Fairplay Magazine, the Los Angeles Times, Men’s Journal, Esquire (UK), and the London Sunday Guardian.

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