Floating rigs performing development work in deepwater Golden Triangle.
2011 2012 2013 2014 2015 2016*
US GOM W. Africa S. America
Notes: *2016 is year-to-date as of Aug. 1, 2016
Source: IHS Markit
in Golden Triangle down but not out
Brazil, West Africa among those with decreased exploration
Although this may seem surprising, but because deepwater projects are many ears in the making, they are not as ensitive to changes in commodity pric- es as are exploratory projects. These
complex projects are planned with a wide
range of possible pricing scenarios.
With that in mind, many exploration and
production companies are battening down
for a long market downturn and either postponing or canceling certain projects. The
goal here is to examine the status of some
deepwater developments and related rig activity in the Golden Triangle region.
US Gulf of Mexico
While deepwater development activity in
the US Gulf of Mexico has definitely slowed
since the market downturn began, it has not
come to a stop. Many projects are still proceeding, albeit in many cases at a delayed
pace from what was originally planned. As of
early August, seven floating rigs are working
on development wells. Compare that to this
time last year, when 13 deepwater wells were
assigned to development work, and one can
tell how much the downturn has deepened.
Normally, a look back five years ago is
what would be expected in a market analysis. However, in this case, it would put the
comparison right in the middle of the aftermath of the Macondo accident, which was
often referred to as the “permatorium” period when no new drilling permits were being issued. Instead, here, this piece will look
back to this time in 2008, which is the month
after the Brent crude oil price exceeded
$145/bbl. In August 2008, five floating rigs
were conducting deepwater drilling.
One project that will not go for ward at this
time is the Chevron-operated Sicily project.
The decision was attributed to the current
price environment and the limited time remaining on the leases. The Sicily discovery
well was drilled in late 2014/early 2015.
Other projects, however, continue to move
forward. Hess’ Stampede project is scheduled for first production in 2018. Total recoverable resources are estimated at around
300-350 MMboe. The start date for the three-year rig program with the Diamond Offshore
drillship Ocean BlackRhino, which had been
scheduled to begin in December 2016, has recently been moved slightly to January 2017.
However, drilling will continue with the drillship. Meanwhile, the hull for the tension leg
platform (TLP) has departed the manufacturing facility, and topsides fabrication and pre-commissioning continues.
Another project also earmarked for a 2018
production start is Chevron’s Big Foot field.
The operator was forced to delay its projected
2015 start following damage to subsea installation tendons was discovered after several
tendons lost buoyancy while preparing for
connection to the TLP. The latest estimate for
start-up is now the second half of 2018.
Meanwhile, appraisal work continues at
Anadarko’s Shenandoah field. This field has
garnered much attention from rig contrac-
tors, as market sources have indicated the op-
erator has been considering the need of a rig
with a 20K psi BOP should the project move
to the development phase. This would be a
step-change for the industry, as the standard
BOP on most high-specification floaters to-
day is a 15K BOP. An additional appraisal well
is scheduled to spud later this year. A final
investment decision is not expected this year.
One bright spot for future potential projects is Shell’s recent confirmation of a discovery at its Fort Sumter prospect. Initial
estimated recoverable resources are over
125 MMboe. Shell is planning additional appraisal drilling. Drillship Noble Globetrotter I
drilled the discovery well along with an appraisal side track. This discovery is in the
vicinity of Shell’s Appomattox, Vicksburg,
and Rydberg fields.
While activity overall has been on a downward trajectory in South America, a trend
that will not be ending anytime soon, the region has experienced a wide array of highs
and lows of late. Exploration and appraisal
successes in a number of frontier areas, like
in the northern part of the continent, are
generating greater interest among operators and will lead to more exploration and
development opportunities. Additionally,
some areas, like Uruguay and northeastern
Brazil, are looking forward to their first substantive exploration programs.