Five independent exploration and production companies and a midstream energy company have agreed to develop multiple ultra-deepwater natural gas discoveries in the Eastern Gulf of Mexico.
Independence Hub LLC, an affiliate of Enterprise Products Partners LP and the Atwater Valley Producers Group (Anadarko Petroleum Corp., Dominion Exploration & Production Inc., Kerr-McGee Oil & Gas Corp., Spinnaker Exploration Co., and Devon Energy Corp.), have agreed to the dedication, processing, and gathering of natural gas and condensate production from six natural gas fields in the Atwater Valley, De Soto Canyon, and Lloyd Ridge areas of the deepwater GoM. As part of the transaction, the producers also have dedicated future production from a number of undeveloped blocks in the area for processing and gathering.
Enterprise will design, construct, install, and ownIndependence Hub, a 105-ft deep-draft, semisubmersible platform with a two-level production deck, that will be capable of processing 850 MMcf/d. Anadarko will operate the platform, which is estimated to cost $385 million.
Independence Hub is in Mississippi Canyon block 920, in 8,000 ft of water. First production is expected in 2007.
Enterprise has awarded contracts to:
•Atlantia Offshore Ltd. for hull and mooring systems design, fabrication, construction, and dry transportation to the staging site at Ingleside, Texas
• Heerema Marine Contractors for hull and mooring systems, transport, and installation
•Alliance Engineering for topsides engineering
• Kiewit Offshore Services for topsides fabrication and installation onto the hull
• Allseas USA Inc. for installation of the gas pipeline.
Enterprise will also own, install, and operate 140 mi of 24-in. pipeline, named Independence Trail, with a capacity of 850 MMcf/d. The pipeline will redeliver the production fromIndependence Hub into the Tennessee Gas Pipeline in West Delta block 68.
GoM to increase production
New incentives to encourage energy companies to explore and develop difficult-to-reach areas of the GoM will help boost peak oil production in the Gulf by 43% and natural gas production by 13% over the next decade, says Assistant Secretary of the Interior for Land and Minerals Management Rebecca Watson.
Oil production in the Gulf will increase to 2 MMb/d by 2006, compared to the current rate of 1.5 MMb/d, and could reach 2.25 MMb/d by 2011, according to MMS projections.
The MMS estimates deepwater oil production in the GoM outer continental shelf in 2003 was 350 MMbbl, increasing slightly from the 349 MMbbl in 2002. MMS also announced that deepwater natural gas production grew to 1.42 tcf in 2003, up from 1.33 tcf produced in 2002.
“A rise in deepwater oil production is fueling this dramatic increase, and almost 80% of Gulf oil production in 2011 is expected to come from this resource-rich region,” Watson says.
However, a recent PFC Energy memo examining the exploration plan (EP) trend in the Gulf reports a sharp drop in the number of EP submissions filed in 2004, as well as a decrease of deepwater exploration wells spudded in the GoM. The decline suggests a possible cooling of exploration interest across much of the GoM deepwater, PFC says. In this sustained high oil price environment, however, PFC thinks there may instead be a sharpening focus among deepwater GoM operators on development, rather than a declining interest in exploration.
MMS lease sales
The MMS has accepted high bids on 346 of 351 tracts offered in offshore Oil and Gas Lease Sale 192, held Aug. 18, 2004. The high bids totaled $169.9 million. Of the 351 tracts receiving bids, MMS rejected four high bids totaling $1,257,085 as insufficient for fair market value. MMS deemed one bid unacceptable because it was below the required bid.
The Houston Exploration Co. submitted the highest bid of $6,775,400 for High Island, East Addition, and South Extension block A-270. This tract is in water depths less than 200 m. Remington Oil and Gas Corp. submitted the second highest bid of $4,877,331 on Garden Banks block 506, and Kerr-McGee Oil & Gas Corp. submitted the third highest of $4,244,200 on East Breaks block 424, both of which are in 800-1,599 m of water.
The MMS announced Lease Sale 194 in the Central GoM for March 16. The proposed lease sale encompasses 4,043 unleased blocks covering 21.3 million acres in the Central GoM Outer Continental Shelf Planning Area offshore Louisiana, Mississippi, and Alabama. The blocks are from 3-210 mi offshore in 4-3,400 m of water. MMS estimates the proposed lease sale could result in the production of 276-654 MMbbl of oil and 1.59-3.3 tcf of natural gas. Eastern GoM Lease Sale 197 is also scheduled for March 16. The proposed lease sale area encompasses 124 unleased blocks in an area of the Eastern GoM OCS Planning Area, and covers 714,240 acres from 100-196 mi offshore in 1,600 m of water to more than 3,425 m. Estimates of undiscovered economically recoverable hydrocarbons in the proposed sale area range from 65-85 MMbbl of oil and 0.265-0.34 tcf of natural gas.
