Offshore recovery slow despite several projects

Reports of a slow recovery in the Gulf of Mexico continue to surface, but there are a few projects that could positively impact activity levels and, thereby, rig and OSV day rates.

Shell Exploration and Production Co. has awarded a contract to McDermott International Inc. for subsea umbilical and flowline installation at its Great White Frio development in Alaminos Canyon block 857 in the U.S. Gulf of Mexico. The scope of work includes project management and engineering plus installation of a flexible flowline, one 2,000′ (610-meter) long steel flying lead along with two electrical flying leads in a water depth of 8,000′ (2,438 meters).

BP has given the name Argos to the new floating production unit for the Mad Dog 2 project in the deepwater Gulf of Mexico. The project includes the Argos semisubmersible platform with the capacity to produce up to 140,000 bpd of crude oil through a subsea production system from up to 14 production wells and eight water injection wells. First oil is expected in late 2021.

In December, BP awarded Subsea 7 S.A. the SURF (subsea umbilicals, risers, and flowlines) contract for the Manuel project in the Gulf. The Manuel project features a two-well tieback to the Na Kika semisubmersible production platform, working at water depths of up to 1,900 meters (6,234′).

BP has approved the $1.3-billion Atlantis Phase 3 development in the deepwater Gulf. Atlantis Phase 3 will include the construction of a new subsea production system from eight new wells that will be tied into the current semisubmersible production platform 150 miles south of New Orleans in more than 7,000′ of water. Production is scheduled to begin in 2020.

These activities represent the development side of the offshore industry and will be responsible for the stabilization and modest growth of offshore activity.

In the exploration and appraisal sector, things don’t look quite as good. “Of the 100,000 wells drilled globally (onshore and offshore) in 2013, 4% were exploration or appraisal wells. In 2018, this share is expected to drop to only 2% of the 70,000 wells drilled,” Rystad Energy said in a company statement published on its website. In the offshore sector, market share of exploration wells changed from 38% in 2013 to 24% in 2018, according to Rystad.

The development projects mentioned above, and others not mentioned in the U.S. and Mexican sectors of the Gulf of Mexico, are a start on the road to recovery. Many analysts believe that a recovery in exploration and appraisal drilling will follow.

About the author

Dr. William J. Pike

Dr. William J. Pike has 45 years experience in the upstream oil and gas industry, including more than 20 years in oil and gas drilling and production operations, both onshore and offshore. He has worked in the U.S., Canada, Britain, Europe and Russia as a technical and economic advisor to the energy industries and various governmental agencies. Pike was editor-in-chief and editorial director for Hart Energy Publishing’s E&P magazine and was also the editor of the Journal of Petroleum Technology, the official publication of the Society of Petroleum Engineers. He holds a doctorate in energy economics from the University of Aberdeen in Scotland.

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