David Paganie, Senior Editor
Facility services more than 75% of all deepwater production and over half the drilling rigs in the Gulf
Port Fourchon’s 1,300 acres are strategically situated at the mouth of Bayou Lafourche (“the fork”) in Lafourche Parish, serving as Louisiana’s only port located literally on the GoM.
The port’s history dates all the way back to 1960 with the formation of the Greater Lafourche Port Commission, established by the state of Louisiana to exercise jurisdiction over an area including Fourchon.
Louisiana’s only elected board of commissioners, who overseas the port’s $34.1 million budget, have supported the facility’s growth and development plans over the years because of its location on the Gulf Coast.
With location serving as its prime selling point, the port has evolved into a critical logistics base for transportation and for securing 16-18% of the US energy supply. Commodities commonly barged from the port include liquid oilfield fluids, heavy waters, cement, and fuel.
Port Fourchon’s tenants are equipped to accommodate a comprehensive range of offshore support services, including offshore supply and support, anchor handling, towing, offshore construction, sales, and barging of fuel, water, mud, completion fluids, barites and methanol, riser inspection and repair, logistics, vessel repairs, rig inspection and repair, pipe storage, repair and bucking, complete dockside and in-slip loading, helicopter base operations, heavy-lift capabilities, and trucking.
Given the port’s robust portfolio of existing core services, ambitious plans are in place and others are on the drawing board to grow the facility’s presence as the “Gulf’s Energy Connection.”
Oil bust drives port growth
Port Fourchon has existed since 1960, but did not sustain real growth until the late 1970s, early 80s. “The oil bust of the 80s is really what drew attention to the port,” explains Ted Falgout, executive director of the port.
During this time, E&P was moving farther out in the Gulf and many of the industry’s service and major oil and gas companies held bases along the coast.
“In order to survive during the bust, these companies were forced to rethink their position on the Gulf, and many of them determined it feasible to either maintain or establish a primary service base at Port Fourchon,” says Falgout.
Amoco, now BP, was the first major oil company to recognize the strategic advantage of setting up a base at Fourchon. The operator came to this decision after conducting an analysis of potential energy savings at the Fourchon location vs. more inland ports, and concluded that it could save over $1 million per year in transportation costs alone.
The E-Slip is a 500-ft wide and 23-ft deep slip, situated on 400 acres of elevated land in the heart of Port Fourchon.
While the offshore industry was dormant, BP, the Louisiana Offshore Oil Port (LOOP), and others were busy building facilities in preparation for the industry’s revival. When this time finally came, the port found itself ready for business, equipped with state-of-the-art facilities and good channel, Falgout says.
The first major port tenant, Martin Fuel, opened for business in 1979. Today, the facility is home to more than 130 tenants.
Ideal location
Major port tenants with operations based at the facility include companies that provide logistics support, drilling fluids, food services, rig repair and construction, helicopter transportation, offshore support and construction, etc. Many of these service providers have chosen to establish a base at Fourchon mainly because of the port’s close proximity to open waters in the central Gulf.
Port Fourchon spans across 3,600 acres of industrial development property. Its 700 acres of developed land sits on the mouth of Bayou Lafourche, which empties into the GoM via the Belle Pass channel.
Belle Pass is designed to accommodate all supply vessels and a large portion of the drilling rig fleet, with a channel that measures 2,600 ft long, 300 ft wide, and 24 ft deep within the port and 26 ft deep inside the jetty system.
Belle Pass provides access to facilities in Pass Fourchon, the E-Slip, and the Northern Expansion via Floatation Canal. Pass Fourchon is a 20-ft deep channel, ideal for supporting shelf activities, while the E-Slip, Northern Expansion, Flotation Canal and Bayou Lafourche all provide access to port facilities via a 23-ft deep channel designed to accommodate deep-draft supply vessels and drilling rigs suited for supporting deepwater developments.
The E-Slip, a 500-ft wide and 23-ft deep slip, is situated on 400 acres of elevated land in the heart of Port Fourchon, providing over 7,000 ft of developed waterfront property, ideal for a wide range of oil exploration and production needs. Construction on the slip began in 1984, and its acreage was sold out by 2000, 30 years ahead of schedule.
The port’s proximity to the GoM offers several advantages, including time saved in transportation in and out of the port, which decreases mobilization and downtime costs. The facility is farther south than any other similar-type base in Louisiana; approximately 18 mi and 56 mi farther south than Venice and Cameron, respectively. According to the port, average transit time to the open Gulf is around 20 min.
In addition, more that 270 large oilfield vessels move intermodal cargo through the port’s channels daily, which is busier than the Mississippi River, according to Falgout. In 2004, approximately 20 million tons of cargo sailed the port’s channels, which is about a 10% increase from 2003.
Fourchon is sixth in domestic tonnage handling compared to all other ports in the US.
“Everything that’s necessary to keep the unseen population offshore operational is moved in and out of the port continuously,” explains Falgout, “and you cannot provide the quantity of materials necessary to fill one of the industry’s state-of-the-art, large supply vessels anywhere else faster than you can at Fourchon.”
Port Fourchon also serves as a base for moving people and product offshore via helicopter as well. Over 6,000 people a week travel to offshore locations in the Gulf by helicopter.
Deepwater E&P
Port Fourchon has established itself over the years as the primary service base for deepwater, given its proximity to the central GoM where most of the deepwater activity is taking place.
The port currently services over 75% of the region’s deepwater oil production. In addition, of the 165 existing and pending deepwater projects identified to date, over 50% are using, or plan to use, Port Fourchon as their service base.
Port Fourchon services 67% of the deepwater discoveries announced to date, including 5 of the 10 confirmed in 2005 - Allegheny South in Green Canyon block 298, Knotty Head in Green Canyon block 512, Genghis Khan in Green Canyon block 652, Jubilee Extension in Lloyd Ridge block 309, and South Dachshund/Mondo NW Extension in Lloyd Ridge block 001. Unocal (now Chevron)-operated Trident in Alaminos Canyon block 903 is the deepest discovery serviced by the port, located in approximately 9,687 ft of water. Shell’s Great White discovery in Alaminos Canyon block 857 is the outermost well serviced by the port, at around 360 mi.
Major deepwater projects with service bases at the port include the Independence Hub in Mississippi Canyon block 920, Thunder Horse in Mississippi Canyon block 778, and Atlantis in Green Canyon block 699.
According to MMS statistics, at the end of 2005, oil production from the Gulf’s deep waters accounted for almost 70% of all OCS production, and gas production from deepwater developments amounted to almost 40% of total OCS production. These figures have dramatically increased over the last 15 years when oil production from deepwater accounted for only 3.5% of total OCS production, and deepwater gas wells supplied less than 1% of all OCS production.
Furthermore, the MMS estimates that by 2011, nearly 80% of all OCS production will originate in deepwater. The OCS currently provides 30% of oil and 21% of natural gas produced domestically, according to the MMS.
Expansion
After the port’s E-Slip filled up, Port Fourchon decisionmakers began permitting for additional acreage north of the slip, dubbed the Northern Expansion project. Expansion plans were approved and construction was underway in 2001.
Phase 1 of The Northern Expansion project calls for development of a 700-acre site, more than doubling the size of the port. Included in phase 1 is construction of a major drilling rig repair facility and development of 180 acres of non-waterfront property and 520 acres with 21,000 linear ft of water frontage.
Two 700-ft wide slips have been completed so far; one 2,200-ft long and the other 7,000-ft long. Two additional slips are currently on the drawing board as is an extensive recreational and residential development in the far northeast corner of the area.
“If deepwater and the ultra-deepwater areas in the Gulf continue to grow, then we anticipate that phase 1 will be complete in around seven years,” says Falgout.
The port indicates that its newly constructed rig refurbishment facilities can save drilling rig companies hundreds of thousands of dollars every year by decreasing tow time and turnaround time for rig repair.
The average rig saves 18 hours of towing time when traveling to Port Fourchon as opposed to other rig refurbishment sites.
In addition, in January 2004, Lafourche Parish voters repealed the ad valorem tax on drilling rigs located in Louisiana for repair and refurbishment, thereby enhancing the port’s ability to accommodate this business.
The port currently services over half of the drilling rigs operating in the Gulf. According to Falgout, the port’s market share for rig service grew to this level from around 10-12% prior to 1995. The port adds that they expect their market share for service in this area to remain steady for the foreseeable future. It is projected that the facility will service 60% of all drilling in the central Gulf over the next 30 years.
According to the port, its most ambitious expansion plans are reserved for Fourchon Island, located at the entrance to Belle Pass. Plans include dredging a 50-ft channel, which will extend 6.5 mi out into open waters, to further accommodate rig repair and refurbishment. This work is estimated to cost $100 million.
“If there is any place on the coast of Louisiana that can accommodate a 50-ft draft with very little environmental impact, it would be here (Fourchon Island),” explains Falgout.
Other expansion plans for the island include construction of containerized shipping facilities to facilitate trading opportunities with Latin America.
To provide continued support for the port’s expansion plans and offshore E&P, the Port Commission opted to acquire the South Lafourche Leonard Miller Jr. Airport and surrounding 1,200 acres, located approximately 23 mi north of Fourchon.
The port says its ultimate intent for the acquisition is to “create an aeronautical hub to support GoM oil and gas activities and just-in-time cargo from foreign origins.”
Scheduled improvements for the airport include expanding the airfield’s runway from 3,800 ft to 6,500 ft x 100 ft with a parallel taxiway to accommodate larger corporate and cargo aircraft. The surrounding 1,200 acres are slated for development as an industrial park. The port says this location is ideal for a variety of oilfield service companies who need to be in close proximity to, but not inside the port. The site offers the flood protection of the South Lafourche Levee System.
The final and probably the most critical improvement plan in the works for the port and its associated facilities is the elevation of the flood-prone two-lane highway, LA 1, that connects Port Fourchon to protected areas farther inland.
The Louisiana Department of Transporation and Development is proceeding to construct a 17-mi elevated four-lane highway from Golden Meadow to Port Fourchon. The most critical link, the Leeville Bridge, is expected to open in January 2008.
According to Falgout, over 1,000 trucks traverse this segment of road every day. Furthermore, a recent study projects that this rate will increase by 80% over the next decade, further accentuating the need for major highway improvements.
“The areas on either side of the highway are the most rapidly eroding estuaries in the world, which increases the road’s vulnerability of being destroyed every day,” adds Falgout. “So far, the port has amassed around $200 million for the proposed highway project, but will likely need an additional $50 million for plans to complete the section from Port Fourchon to Leeville.”
In further addressing the importance in maintaining a road for steady flow of traffic between the port and supply and service entities, the port says around 650 MMbbl of crude is transported via pipelines through the base every year, its facilities handle 13-15% of the nation’s imported oil, and an increasing amount of deepwater domestic oil. Additionally, the major pipelines running through the port connect to over half of the US refining capacity.•
What a ride!
I have been executive director of Port Fourchon for almost 28 years, during which time the port has seen unmatched progress. The founder of Port Fourchon, late Senator A.O. Rappelet’s vision of creating a Port on the Gulf to keep the banana trade from leaving Louisiana was not realized, but something far more significant materialized. From muskrats, mosquitoes, and a treacherous channel, the mouth of Bayou Lafourche has evolved into a world-class offshore energy shore base with unparalleled efficiency. What a ride!
Port Fourchon has truly become a major economic catalyst for the region and plays a very significant role in supplying this nation with energy. It is clear that the deepwater GoM has become our niche and that we have achieved dominance in servicing an “Expanding Frontier,” as MMS puts it.
2005 hurricanes affect Port Fourchon
This success has come with no shortage of challenges, and one need only to look at the record hurricane season of 2005 to expose vulnerabilities in landside and offshore energy support infrastructure. Port Fourchon was visited by three hurricanes - Cindy came right over us, Katrina just to the east, and Rita to the west - all impacting Port Fourchon. Fortunately none of these storms was so devastating that we were not able to rebound quickly and commence operations almost immediately to assist in the recovery.
Highway infrastructure vulnerable
Our highway infrastructure presents our greatest vulnerability. We have made great strides toward improving the Leeville Bridge crossing Bayou Lafourche, the “weakest link,” but more must be done. We have begun but must complete the elevated highway connecting Port Fourchon to the hurricane protection levee system. Unfortunately, along with these storms came huge increases in construction costs resulting from energy costs, cement, and steel prices skyrocketing and unavailability of labor.
A call for federal government to share in offshore revenues
Without a dedicated stream of substantial revenue, it will become increasingly difficult for Louisiana to protect its coast and maintain support for critical energy infrastructure. There is a groundswell of support calling for the federal government to share the revenues it receives from offshore waters with the states that support such offshore activity. If states that carry the burden of support for this federal outer continental shelf activity would receive a 50% share like states that have production on federal lands within that state do, then Louisiana could protect its coast and greatly reduce the landside vulnerabilities plaguing continued offshore production. Now is the time for the offshore oil and gas industry to get aggressively behind this effort.
A look into the future
If a mechanism for funding meaningful coastal restoration efforts and infrastructure upgrades is achieved, the future of Louisiana’s southern-most port is extremely promising. The logistical advantages that have allowed it to develop into a world- class energy support facility apply to other facets of the oil and gas industry and just about any seagoing transportation business imaginable including foreign trade. After all, the saying “Time is Money” has no better application.
The port’s unique geographic setting also makes it an ideal site to accommodate deeper drafts in the future. Sitting only 6.5 mi from the 50-ft contour in the Gulf makes dredging costs pale in comparison to other sites. If the saying “History Predicts the Future” holds, Port Fourchon’s extensive accomplishments over a relatively short time bode very well for its future growth plans.
