GULF OF MEXICO

Spar illustration courtesy of Shell.

The DVA (direct vertical access) spar will commingle production from the Great White, Tobago, and Silvertip fields. First production is expected by 2010 at the earliest. Great White will be the first to come onstream.

The hub will be equipped with capacity for drilling, gathering, and processing of 130,000-boe/d, and exporting within a 48-km (30-mi) radius. It will be installed near the Great White discovery.

“The Perdido Foldbelt is remote and is located in ultra deepwater from about 2,286 to 3,048 m (7,500-10,000 ft), with rugged seafloor terrain,” explains Marvin Odum, executive VP of Shell E&P Americas. “This geologic setting is different from what has previously been produced in the Gulf of Mexico and will establish the first production from the Lower Tertiary (Paleogene) play in the region.”

Shell contracted Technip to provide engineering, procurement, and construction for the spar’s hull and mooring system.

Technip’s contract calls for design and fabrication of the spar’s hull and mooring system, platform load-out and quayside delivery at a yard on the Gulf Coast, and design of the steel catenary risers, top tension risers, and umbilicals.

The company’s Houston office will provide the overall project management and engineering for the contract. The detailed hull design and fabrication will be carried out by Technip’s yard in Pori, Finland.

Shell (35%) will operate the Perdido regional host. It will be jointly owned by Chevron (37.5%) and BP (27.5%). The Shell-operated Great White field is in Alaminos Canyon blocks 812, 813, 814, 857, 900, and 901 and is owned by Shell (33.34%), Chevron (33.33%), and BP (33.33%).

The Shell-operated Tobago field is in Alaminos Canyon bock 859 in 2,926 m (9,600 ft) of water. Shell holds a 32.5% working interest in the field with Chevron (57.5%) and Nexen (10%).

The Shell-operated Silvertip field is in Alaminos Canyon block 815 in 2,804 m (9,200 ft) of water. Shell holds a 40% working interest in the field. Chevron owns the remaining 60%.

ATP has elected to use a spar-type facility as a hub as well. In 2008, the company plans to install a MinDOC 3 hull, which is based on a floating, drilling, and production concept. According to ATP, this hull design was selected over competing technologies because of its higher variable load capacity and lower cost. Gulf Marine Fabricators received an LOI to fabricate and loadout the hull from its south Texas yard. Facility fabrication is scheduled to begin in 1Q 2007, with delivery in 2Q 2008. TheTelemark Hub will receive hydrocarbons from ATP’s 100% owned and operated Telemark field (Atwater Valley block 63), Mirage field (Mississippi Canyon block 941), and Morgus field (Mississippi Canyon block 942. A fourth well from its 100% owned and operated Oasis field (Mississippi Canyon block 943) will be tied in to the platform, pending exploration results.

In other floating production news, Helix has acquired a re-usable vessel to produce from its Phoenix field in Green Canyon blocks 236/237. Surrounding wells will be connected to the facility from its Boris field (Green Canyon block 282), Little Burn field (Green Canyon block 238), and from prospects in five nearby blocks. Project startup is expected in 3Q 2008.

The company acquired a 100% working interest in Phoenix, previously named Typhoon, from Chevron and BHP Billiton.

Discoveries

Eni drilled a gas discovery with its Longhorn North well in Mississippi Canyon block 502 in 710 m (2,329 ft) of water. The well was drilled to 3,400 m (11,155 ft) TD. The company is evaluating possible development alternatives with plans for an early production startup.

Meanwhile, Petsec hit pay in shallow water. The company found gas with its Mobile Bay block 950 well No.1. The Royal Exploration Co.-operated discovery well was drilled to 990 m (3,249 ft) MD in 20 m (67 ft) of water. It encountered 10 m (34 ft) of net gas pay in two sands, meeting pre-drill expectations, according to Petsec.

The well has been cased and will be completed for production. A caisson will be installed to support production facilities.

Fiber optics

BP America Inc. is building a 1,287-km (800-mi) undersea fiber optic system in the Gulf of Mexico to provide continuous broadband connectivity to the company’s offshore oil and gas facilities.

According to the company, the system will allow greater operating flexibility, including the ability to continue producing safely for longer periods when hurricanes enter the Gulf and to return production more quickly after storms pass. With this system, in some cases, the facility may not have to be shut in at all, says BP.

“This $80-million investment will allow early evacuation of our offshore staff while keeping critical energy supplies flowing, as well as improving our operating efficiency and operability year round,” says Kenny Lang, BP vice president of GoM.

“During routine operations, the fiber optic network will allow each of BP’s new cutting edge technology centers in Houston to remotely apply high-level technical expertise to our offshore producing facilities. The large bandwidth provided by the network will enable staff in the Houston centers to monitor offshore digital operating and safety equipment which will contribute to faster problem resolution for our operations,” says Lang.

In the future, the network may make it possible for BP staff onshore to control offshore facilities, remotely.

The system will initially link seven of BP’s deepwater production facilities includingMarlin, Horn Mountain, Na Kika, Thunder Horse, Atlantis, Mad Dog, and Holstein, to the new Advanced Collaborative Environment (ACE) centers in Houston.

Each facility will have direct optical connectivity to Houston through two independent routes. It will ensure continued operations, independent of any other facility in the system during hurricane events.

The Gulf of Mexico network will incorporate an upgrade capability designed to support 64 platforms. Excess bandwidth will be made available commercially for third-party deepwater operators, as well.

BP signed a contract with TYCO Telecommunications to construct the undersea fiber optic system. The company will manufacture the system at its plants in Newington, New Hampshire, and Lowell, Massachusetts. TheTyco Decisive, a 140-m (459-ft) cable laying vessel based at the company’s depot in Baltimore, Maryland, will deploy the product and secure the connections to the platforms.

The fiber-optic system is planned to be operational in late 2007.

Asset transactions

Statoil will acquire from Anadarko two of its discoveries and one prospect, for $901 million. The assets included in the transaction are Knotty Head (25%), Big Foot (15%), and Big Foot North (15%). The transaction is expected to close in 1Q 2007.

Anadarko and Transocean drilled and completed the deepest subsea well in the world, according to the companies. Transocean’s drillshipMillennium (pictured) completed the Anadarko-operated Lloyd Ridge block 399 well No.2 on the Cheyenne field in the Gulf of Mexico in 2,731 m (8,960 ft) of water. According to the operator, the well tested at 73 MMcf/d of gas. Anadarko owns a 100% working interest in the field. Photo courtesy of Transocean.

“This deal is an excellent strategic fit with our deepwater GoM portfolio, building on our recent acquisition of assets from Plains,” says Helge Lund, Statoil’s president and CEO.

“In less than two years we have developed a strong deepwater position in the GoM,” says Lund. “Our experience and strong technology base from the Norwegian continental shelf are great assets in tackling future developments in the GoM. We are a leading subsea operator and have a strong track record in increased oil recovery, which will add value in our GoM operations.”

“We are well positioned in key deepwater areas, with working interest in 11 discoveries, including the current development of the Tahiti field,” says Øivind Reinertsen, senior VP for GoM activities.

The Knotty Head discovery is close to the Chevron-operated Tahiti and Tonga discoveries, where Statoil holds a 25% working interest. It is also close to the Shell-operated Caesar discovery, in which Statoil holds a 17.5% working interest.

In the same geological trend as Tahiti and Caesar, the Big Foot discovery lies in the Walker Ridge area near the Jack and St. Malo discoveries operated by Chevron. Statoil holds a 25% working interest in Jack and a 6.25 % working interest in St Malo.

Knotty Head and Big Foot are expected to be producing in 2010 at the earliest.

In a separate transaction, Anadarko is swapping with Chevron its interests in the Mackenzie Delta, Beaufort Sea, and Yukon areas in return for a 12.5% working interest in seven deepwater blocks including Tonga in Green Canyon block 727. Anadarko plans to tie back the field to its 100% ownedConstitution spar in Green Canyon block 680.

Meanwhile, Pogo plans to divest certain “non-strategic assets” including properties in the GoM. The company expects to close on the sale by the end of 1Q 2007.

Also, BHP Billiton, with partners Hess and Repsol YPF, have purchased the Genghis Khan field from Anadarko. The transaction includes certain rights for Green Canyon blocks 652 and 608. Two wells and a development structure are already in place on the field, which is part of the same geological structure as the recently sanctioned Shenzi project.

Discovered in 2005, Genghis Khan includes estimated gross hydrocarbon reserves in the 65 -70 MMboe range. It is in 1,311 m (4,300 ft) of water and lies within 5 km (3 mi) of theMarco Polo TLP. Development of Genghis Khan will proceed through the connection of up to seven subsea wells where the pipeline infrastructure is already in place. First oil is expected in mid-2007.

“The acquisition of Genghis Khan provides BHP Billiton with a significant undeveloped asset in the deepwater GoM with near-term production that we will operate,” says J. Michael Yeager, group president of energy for BHP Billiton. “The location of Genghis Khan adjacent to the Shenzi oil and gas field will allow the company to benefit from developmental synergies and will provide knowledge that will enhance the Shenzi development when it’s onstream in 2009.”

BHP Billiton operates Shenzi with a 44% interest. Hess and Repsol YPF each hold a 28% interest. Ownership and operating interests in Genghis Khan will be the same as Shenzi when the transaction is complete.

PetroQuest Energy Inc. has sold its interests in 17 mature GoM fields to a private company for $17 million, subject to post-closing adjustments. Estimated proved reserves totaled approximately 8.7 bcfe at closing, and the properties had a substantial near-term abandonment obligation.

David Paganie, Houston