Providing coverage of Alaska and northern Canada's oil and gas industry
September 2006

Vol. 11, No. 39 Week of September 24, 2006

Thunder Horse rides into more trouble

First oil from Gulf’s largest field postponed to mid-2008, after ‘metallurgical failure’ detected in subsea system

Ray Tyson

For Petroleum News

First production from the troubled Thunder Horse field, the U.S. Gulf of Mexico’s largest oil discovery, has been delayed again, this time until at least mid-2008, field operator BP said Sept. 18. The company said the decision to postpone field startup was made after a series of tests carried out over the past four months revealed “metallurgical failure” in components of the field’s subsea system.

Thunder Horse, located in Mississippi Canyon, was initially scheduled to start producing in the second half of 2005, but hurricane damage and equipment problems along the way repeatedly interfered with startup plans.

The field missed its 2005 startup when Hurricane Dennis swept through the region, causing damage to the Thunder Horse platform and causing it to list 20 to 30 degrees, according to BP. However, the U.S. Minerals Management Service all but dismissed Dennis and its high winds as the cause of the listing. Nevertheless, BP said damage from the hurricane would postpone Thunder Horse production into 2006.

In 2003, development drilling was suspended at Thunder Horse when a marine riser separated between Transocean’s Discoverer Enterprise drillship and a production well about 6,000 feet below the ocean surface. Transocean was drilling BP’s ninth development well at Thunder Horse when the riser separated, in what industry experts said was a rare occurrence.

The recent subsea equipment failure at Thunder Horse came just weeks after BP was forced to shutdown significant amounts of oil production at Alaska’s Prudhoe Bay field because of pipeline corrosion.

Loss of production biggest cost

This time around, BP said it would retrieve and rebuild all of Thunder Horse’s seabed production equipment. But the company said it was too early to estimate the costs involved in replacing the affected systems, which some industry analysts said could add tens of millions of dollars to the project. The production facility alone cost more than $1 billion. However, the biggest hit will come from lost production.

BP said the recent problem became evident when it conducted pre-commissioning tests by pumping water through the system to establish system integrity.

The equipment passed all the normal industry standard tests and regulatory requirements, but when the company carried out “more prolonged and rigorous testing,” as an additional safety precaution, a failure occurred on a subsea weld, BP said.

As a consequence of the failure, the company decided to retrieve both the damaged seabed manifold and a second manifold for further examination and onshore testing, BP said, adding that the second manifold displayed a similar failure during testing.

BP said in a July conference call with industry analysts that leaks in the manifold would delay first production at Thunder Horse from late 2006 into early 2007, but didn’t specify the cause of the damage.

The manifold, built by Houston-based FMC Technologies, is a massive subsea structure designed to send oil and gas from individual wells up toward the production platform. Reportedly, the structure could have been damaged during Hurricane Dennis.

One industry analyst theorized that the leaks may have come from “hydrogen embrittlement” of the welds, with the hydrogen coming from seawater that seeped in through cracks in the insulation. The insulation then may have been damaged as the manifolds, insulated in 2004, sat unused for an extended period on the sea floor.

Will replace all components at risk

In view of the failures at Thunder Horse, BP said it would retrieve and replace all the subsea components it believed could be at risk, adding that the work would be done over the course of the next year and that it did not expect production from the Thunder Horse field to begin before the middle of 2008.

BP began deepwater Gulf of Mexico operations in the mid-1980s, and now produces about 270,000 barrels of oil equivalent per day from nearly two dozen fields, including BP-operated facilities at Pompano, Marlin, Horn Mountain and Na Kika.

The Thunder Horse field was discovered in 1999, and was designed to use the largest production drilling semi-submersible platform in the world. The platform weighs more than 50,000 tons and will produce from water depths of about 6,000 feet, from some of the highest temperature and highest pressure wells in the Gulf of Mexico. The production platform is located on Mississippi Canyon Block 778 about 150 miles southeast of New Orleans, La.

The Thunder Horse facility was designed to process 250,000 barrels of oil and 200 million cubic feet of gas per day from a reservoir estimated to contain around 1 billion barrels of oil equivalent. Oil and gas will be transported to existing shelf and onshore interconnections via the Mardi Gras transportation system. BP operates Thunder Horse with a 75 percent interest, with partner ExxonMobil owning the remaining 25 percent interest.

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