LNG terminals
The US Coast Guard and the Maritime Administration have received six applications for the licensing of deepwater ports involving proposed LNG facilities. The facilities would receive LNG ships, re-gasify the LNG offshore, and transport the natural gas to onshore markets through new pipelines that interconnect with existing pipelines.
The world’s first LNG terminal to come online is Energy Bridge in the Gulf of Mexico, 116 mi off Louisiana. Advanced Production and Loading AS of Norway (APL) supplied and installed its Submerged Turret Loading buoy system, which loads crude oil offshore, to Energy Bridge in February. The terminal is owned and operated by Excelerate Energy LLC.
The STL system can deliver gas volumes in excess of 500 MMcf/d. The first offshore discharge of an LNG carrier was expected to take place in March. The LNG vessels using this terminal are standard LNG carriers with onboard re-gasification and STL shipboard equipment.
Following on its heels, the US Maritime Administration (MARAD) has approved Shell Gas & Power’s Gulf Landing offshore LNG terminal in the GoM.
Gulf Landing will provide 1 Bcf/d of natural gas. The facility will be a gravity-base structure in 55 ft of water 38 mi offshore Cameron, Louisiana. Gulf Landing’s location in an oil and gas production area could connect to five major interstate pipelines to deliver natural gas to much of the Southeast, Midwest, Northeast, and Mid-Atlantic US.
Deep discoveries
El Paso Production Co., a subsidiary of El Paso Corp., has made a deep shelf discovery at West Cameron block 75.
The West Cameron block 75 No. 1 well, located 15 mi offshore Louisiana in about 35 ft of water, was spudded in August 2004. El Paso logged more than 40 net ft of gas in the Lower Miocene and anticipates a high-rate completion. The well was drilled to 22,824 ft TMD.
El Paso Production Holding Co. operates the well and owns a 36% working interest.
The first 25 bcf produced from the reservoir qualifies for royalty relief from the US Minerals Management Service. Development opportunities are being evaluated.
After testing the West Cameron block 75 No. 1 well, El Paso will begin drilling a second deep shelf prospect in an offsetting block, West Cameron block 62. El Paso will have a 54% working interest in that prospect. Following the well on West Cameron block 62, further development could resume on West Cameron block 75. Production from West Cameron block 75 is expected to begin in 4Q 2005 after facilities installation.
Rowan�s Gilbert Rowe jackup drilled the West Cameron block 75 deep shelf discovery for El Paso.
Newfield has made three new deepwater discoveries, including its first operated GoM discovery with its Wrigley Prospect, located at Mississippi Canyon block 506 in about 3,700 ft of water.
The No. 1 well found 90 ft gross of high-quality, dry gas pay. The wellbore was sidetracked 250 ft up-dip and found 44 ft gross of similar quality gas pay. Newfield plans to tie back the well to existing infrastructure in the area and expects first production in mid-2006. Newfield owns a 50% interest in the Wrigley development and estimates that reserves are 55-85 Bcfe. Two additional prospects, supported by similar seismic amplitudes, exist on the block and could be tested later this year.
Newfield also announced a deepwater discovery with the Anduin prospect at Mississippi Canyon block 755 in about 2,400 ft of water. The well found about 48 ft of gross oil pay. The partners are preparing to drill an up-dip sidetrack location. Information from the sidetrack will be used to determine Anduin’s reserve size and development options. Two additional locations exist on Mississippi Canyon block 755 and adjacent block 754. Newfield owns a 50% non-operated interest in Anduin.
In late 2004, Newfield drilled a successful gas well at its La Femme Prospect at Mississippi Canyon block 427 in about 5,800 ft of water. The No. 1 well found about 90 ft of gross hydrocarbon pay. Newfield believes that a second well is needed to determine field size and commerciality. A second well is planned for mid-2005. Newfield is the operator of La Femme with a 50% working interest.
New incentive for ultra-deep drilling
The US Department of the Interior’s Minerals Management Service has issued a proposed rule that will allow Suspensions of Operations (SOO) to oil and gas lessees or operators who plan to drill ultra-deep wells. MMS expects the new rule will lead to increased drilling of ultra-deep wells and increased domestic production.
The proposed rule would encourage drilling of ultra-deep wells to depths of at least 25,000 ft TVD sub-surface by granting a SOO in certain situations.
Generally, when a lease reaches the end of its primary term, the lessee must be producing or conducting other lease holding operations to extend the lease beyond its primary term. However, due to the added complexity and costs associated with planning and drilling an ultra-deep well, MMS recognizes that more time may be needed for exploration and development. In such cases, the lease term could be extended through an SOO.
The proposed rule would grant SOO, under the following circumstances:
• The lease has either a five-year primary term, or an eight-year primary term with a requirement to drill within the first five years
• The lessee or operator has plans to drill an ultra-deep well (at least 25,000 ft TVD SS) on the lease
•Before the end of the fifth year of the primary term, the lessee or operator must have acquired and interpreted geophysical information that indicates that all or a portion of a potential hydrocarbon-bearing formation is ultra-deep and includes full 3D depth migration over the entire lease area
•Before requesting the suspensions, the lessee or operator has conducted or is conducting additional data processing or interpretation of the geophysical information with the objective of identifying a potential ultra-deep hydrocarbon-bearing formation
• The lessee or operator demonstrates that additional time is necessary to complete current processing or interpretation of existing geophysical data or information; acquire, process, or interpret new geologic and/or geophysical data or information that would impact the decision to drill the same geologic structure or stratigraphic trap; or drill into the potential hydrocarbon-bearing formation identified as a result of the activities conducted in previous paragraphs.
Although some leases with 10-year primary terms are issued in deepwater, they are not covered by the proposed rule because MMS believes that 10 years is sufficient to explore and develop such deep prospects.
