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Gulf producers to work together on development Huge risks for Shell, Chevron, Unocal in ultra-deepwater Alaminos Canyon Petroleum News Houston Staff
Major players in the Gulf of Mexico’s ultra-deepwater Alaminos Canyon, faced with enormous financial risks, now say they are going to work together on how best to proceed with developing combined reserves that could exceed 1 billion barrels of oil equivalent.
But field operators Shell, ChevronTexaco and Unocal indicated the planning process alone could take several years and obviously years longer before first oil is produced from wells planted roughly 10,000 feet below the ocean surface.
Located in the most southern portion of the western gulf near Mexican territorial waters, Alaminos Canyon development could be the world’s deepest in terms of water depth.
With two discoveries in the bag and a possible third one in the neighborhood, the companies are said to be learning toward a hub or central production facility versus stand-alone developments. That would open the door to information sharing while spreading financial and technical risk.
Trident holds announced estimated reserves of 150 million to 200 million barrels. Great White reserves have not been disclosed but industry analysts speculate it contains around 400 million barrels.
Just east of Trident is the ChevronTexaco-operated Toledo prospect with pre-drill estimates of 400 to 500 million barrels. Coupled with Great White and Trident, combined reserves could easily surpass 1 billion barrels of liquids should Toledo pan out.
ChevronTexaco is shopping up to 50 percent of its 100 percent interest in Toledo in an effort to spread risk. An initial exploration well there could run $30 million to $40 million, the company has indicated. Faster development closer to pipelines At lesser water depths closer to existing pipelines, Shell-operated Great White and Unocal-operated Trident likely would be on much faster tracks to development. These discoveries would be considered more than worthy of stand-alone developments.
But in remote areas like ultra-deepwater Alaminos Canyon, where pressures and temperatures are mind-boggling, technologies are being stretched to the limit and even questioned, making project commitments difficult. There appears to be no room for costly errors at those extreme depths.
“There is a great emphasis on doing it right the first time,” commented one industry official at Houston’s Offshore Technology Conference earlier this month. “The price failure is very high.”
Well integrity is a major issue, as well as maintaining flow through sub-sea pipelines and risers that take oil and gas from the ocean floor to production facilities at the surface. The buildup of solids, such as waxes and gas hydrates, are said to be particularly problematic.
Floating production, storage and offloading system Field owners in Alaminos Canyon also will have to settle on a production and transportation system, perhaps some form of a floating production, storage and offloading system, more commonly known as an FPSO, with shuttle tankers to transport the oil to shore. The closest pipeline system may be beyond economic reach.
FPSOs are widely used around the world, not only because they can be less expensive than installing deepwater pipelines but because they also give producers the flexibility to ship oil to markets offering the best price.
However, FPSOs are untested in the Gulf of Mexico, despite the fact the U.S. Minerals Management Service approved their use for the region two years ago. There have been no applications, according to MMS.
The Canyon Express gas-gathering system, located in east Mississippi Canyon and launched in September 2002, holds the current world record water depth for production at 7,200 feet, flowing through the world’s third longest gas-gathering line at 57 miles.
Canyon Express also was the first time that production from multiple fields has been commingled using advanced sub-sea technology, including the use for the first time of sub-sea multiphase meters in allocating production from three different fields — King’s Peak, Aconcaugua and Camden Hills. Total operates Canyon Express. Partners include Pioneer Natural Resources, Marathon Oil, BP and Nippon Oil Exploration USA.
In addition to Alaminos Canyon, Kerr-McGee’s Merganser and Vortex discoveries in Atwater Valley, located in 8,000 to 9,000 feet of water, is a candidate for the next deepest gulf development. However, Kerr-McGee has said it needs a few more finds before pursuing a “hub-and-spoke” natural gas development in the region.
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