The Gulf of Mexico, more than any other major deepwater region in the world, has experienced massive changes in the last five years with long-term implications for the future of the region and the GoM’s supply & demand effects on the global deepwater oil and gas market, Quest Offshore says in its report.
The worldwide financial crisis and subsequent recession, shale gas’ implications on U.S. natural gas prices and the aftermath of the Macondo incident have led to significant changes in the outlook for the region. Despite those overwhelming obstacles, the U.S. GoM’s future is bright with a pronounced recovery expected in all major market segments from drilling to subsea, floating production and marine construction.
Overall spending in the region is expected to increase significantly starting in 2013 up nearly 30 percent to $40 billion. Total expenditures are expected to reach a significant $167 billion in the 2013 to 2016 period. For the first time, 2012 is expected to represent an investment shift with deepwater CAPEX and OPEX spending surpassing that in shallow water. In the under developed ultra-deepwater frontier areas of the region, challenging technical and reservoir conditions will result in increased spending across the board, a trend expected to continue through the foreseeable future.
Five years ago the region was a mix of major and independent oil companies executing both oil and gas standalone and subsea tieback projects. In 2013 and beyond, Quest sees more oil dominance with offshore gas waning. Large international oil companies will play a larger role with the execution of standalone (hub) projects with niche-focused independents looking to infrastructure-led drilling around existing hubs and mega-independents continuing to grow their strategic portfolios in select basins.
In Quest Offshore’s latest market report, Quest Deepwater Review: Gulf of Mexico 2013 and Beyond, the reader will gain a comprehensive understanding of current trends and expectations from one of the leading deepwater basins, the U.S. Gulf of Mexico.
Leasing Activity Positive for Deep and Ultra-deepwater
Leasing activity is rightly seen as the furthest leading indicator for prospective oil and gas activity not only in the Gulf but throughout the world. Due to the relatively long lead times between leasing, drilling and production, leasing trends can be expected to provide insight on future activity for years to come. With one-third of active deepwater leases, oil majors and national oil companies are expected to continue to be the driving force for pushing the boundaries of the Gulf of Mexico’s development. Excluding Anadarko and Conoco, all recent frontier projects have been undertaken through operatorship’s of one of the majors or national oil companies (BP, Chevron, Exxon, Shell, Total, Statoil, Petrobras), and we expect this theme to persist moving forward.
Drilling Permitting on an Upward Trend
Drilling permit approvals are showing noticeable increases over the past six months with total counts back to pre-Macondo levels. As of the end of September there have been 78 new exploration drilling permits and 36 new development drilling permits approved over the year.
While raw permit counts are showing positive movement this year, the comparison in permits issued per project highlights the underlying cause for such steep increases in the first half of 2012. Multi-well projects (defined as five or more wells) have seen a record permitting pace since late 2011; examples of this trend include Chevron’s Jack/St. Malo Project, Shell’s Mars B Project, Hess’s Tubular Bells project, Chevron’s Big Foot and most recently the BP’s Atlantis North development, while true wildcat exploration permit numbers are still well below levels seen prior to the drilling moratorium.
Drilling Market Accelerating
Notable discoveries of ultra-deepwater fields in the Lower Tertiary continue to increase the reserve and production expectations for the region. The shift in the Gulf is most apparent in the floating rig market with four operators now possessing 50 percent of the contracted rig fleet. Ninety percent of rigs operating are high-spec and rated for ultra-deepwater.
Robust Outlook for Deepwater Development
Since 2008, the U.S. Gulf of Mexico has undergone a shift in project development mix from heavy in small, independent-operated subsea tiebacks to one that is grounded in fewer, larger subsea tiebacks and high-investment standalone developments developed by international oil companies and mega-independents.
This shift towards fewer, larger subsea tiebacks as well as increased FPS units will have profound effects on the future of the subsea sector as the hardware installed evolves as a direct result of fewer gas developments and deeper, more challenging fields. Subsea equipment manufacturers will experience fewer, but larger scope, award opportunities through the forecast period. As these developments move into more challenging areas, the value of these subsea production packages are expected to increase significantly as HP/HT trees and subsea processing become an enabler for these complex, capital-intensive projects.
This next wave of FPS developments is, for the most part, in ultra-deepwater and in more remote areas not currently connected to shallow water or onshore infrastructure. These developments will materially impact the pipeline and marine construction markets (SURF) as these production hubs are connected to existing export infrastructure through 2016 and beyond. The subsea tieback potential for these hubs is most likely to be seen in the latter half of this decade and into the following, with these latest hubs laying the foundation for the next generation of deepwater developments in the region.
- Gulf of Mexico poised for resurgence in 2013 (fuelfix.com)
Under the Technology License Agreement, BP will make available technical information that PEMEX E&P, one of four subsidiaries of PEMEX, can use, in addition to PEMEX E&P initiatives already in place, if it decides to build and maintain its own well capping system for use in Mexican waters of the Gulf of Mexico.
In addition, BP has agreed to conduct workshops in Houston to brief PEMEX E&P on the technical information and operational aspects of the system, as well as to introduce PEMEX E&P specialists to key vendors and fabricators that BP used to develop its global deepwater well cap and tooling package.
“The agreement marks another step forward in PEMEX E&P’s ongoing efforts to help protect the rich Gulf of Mexico environment in which we operate, as well as to apply state-of-the-art technology as we develop Mexico’s deepwater oil and natural gas resources,” said Carlos Morales, president of PEMEX Exploration and Production.
Richard Morrison, BP’s Head of Global Deepwater Response, said the agreement underscores BP’s commitment to sharing lessons learned during and following the 2010 Deepwater Horizon accident and response.
“Today’s announcement builds on our commitment and the work we have done — and continue to do — to help advance global deepwater response capabilities around the world,” he said.
“We are pleased to provide PEMEX E&P with access to our recent technological innovation and information so that operators in both the USA and Mexico areas of the Gulf of Mexico can be equipped to respond to a subsea well control incident in the Gulf of Mexico.”
BP’s global deepwater well cap is a 100-ton stack of valves that can be lowered onto a leaking well to halt the flow. The system can operate in 10,000 feet of water and is rated to pressures of 15,000 pounds per square inch. Stored in Houston, it can be sent by heavy-lift aircraft to any country where BP operates in a matter of days.
Under the Technology License Agreement, BP will share at no cost to PEMEX E&P technical information on BP’s capping stack, and PEMEX E&P has agreed to make any future advancements to this well-capping technology available at no cost to BP. BP will retain intellectual property rights, so it can continue to share the plans with others.
BP, which has had a presence in Mexico for around 50 years, has collaborated with PEMEX E&P through a variety of non-commercial technology, scientific and training mutual cooperation agreements over the last decade. Those have resulted in hundreds of workshops, seminars and exchanges to share best practices and technological expertise.
- Pemex Signs Deal to Use BP’s Well-Capping Technology in Gulf (ibtimes.com)
- Mexico Announces New Significant Crude Oil Discovery in Gulf of Mexico (hispanicallyspeakingnews.com)
Deep Down, Inc., an oilfield services company specializing in complex deepwater and ultra-deepwater oil production distribution system support services recently announced they have received multiple contracts from an international operator and a major international controls manufacturer for the manufacture of flying leads and associated services worth in excess of $2.3 million; pending finalization of engineering design for one of the projects.
The first contract is for additional flying leads, equipment and services in support of a project located offshore Ghana, West Africa with delivery scheduled in the third quarter 2012. The second contract, which is also scheduled for delivery in the third quarter 2012, is for installation on a project in the U.S. Gulf of Mexico. The third contract is for a project on the Northwest coast of Australia, with delivery scheduled the first quarter 2013. The latter is a first-of-its-kind deployment with five electrical quads which integrate into the loose steel-tube flying lead (LSFL) bundle with end terminations serving as mini umbilical termination assemblies (UTAs). This configuration was chosen for its superior handling characteristics, as well as installation efficiency; a key advantage is that installation can be achieved with a single ROV assisted lay down instead of multiple lay downs.
Ron Smith, Chief Executive Officer of Deep Down, Inc. stated, “These awards reaffirm the efforts Deep Down has put into our flying leads to provide our customers with quality, affordability and most importantly, a more efficient and safer installation solution.”
Deep Down, Inc. is an oilfield services company serving the worldwide offshore exploration and production industry. Deep Down’s proven services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, distributed and drill riser buoyancy, ROVs and tooling, marine vessel automation, control, and ballast systems. Deep Down supports subsea engineering, installation, commissioning, and maintenance projects through specialized, highly experienced service teams and engineered technological solutions. The company’s primary focus is on more complex deepwater and ultra-deepwater oil production distribution system support services and technologies, used between the platform and the wellhead.
- Maersk Bags Gulf of Mexico Contract for Its Under-Construction Drillship (mb50.wordpress.com)
- Noble’s New Drillship Enters Three-Year Contract in GoM (mb50.wordpress.com)
Deep Down, Inc. and Bornemann Pumps, Inc. today announced the formation of a strategic alliance to provide high-quality subsea pumping packages and services to the Gulf of Mexico subsea oil and gas industry.
As part of the alliance, Deep Down will manage the overall project management, subsea engineering, local support functions and fabrication of the subsea structures. Bornemann will handle system and process engineering, fabrication of the subsea pumps and hydraulic control modules; both parties will work together on other technical aspects of the projects, as needed.
Ron Smith, Chief Executive Officer of Deep Down, Inc. stated, “We are thrilled to be teaming up with Bornemann Pumps to offer the Gulf of Mexico subsea market a specialized solution. As long as tiebacks and deepwater production continues to increase, the need for subsea boosting is paramount to the success of some of the subsea developments.”
Axel Jäschke, Head of Subsea Division for Bornemann Pumps stated, “We are very excited to have Deep Down as our subsea specialist. Now we can provide commercially attractive and well proven Bornemann technology in a complete package to all of our subsea clients.”
About Deep Down, Inc.
Deep Down, Inc. is an oilfield services company serving the worldwide offshore exploration and production industry. Deep Down’s proven services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, buoyant solutions, ROVs and tooling, marine vessel automation, control, and ballast systems. Deep Down supports subsea engineering, installation, commissioning, and maintenance projects through specialized, highly experienced service teams and engineered technological solutions. The company’s primary focus is on more complex deepwater and ultra-deepwater oil production distribution system support services and technologies, used between the platform and the wellhead.
About Bornemann Pumps, Inc.
Since the company’s founding in Germany in 1853, Bornemann has been setting the industry pace in pumping innovations. In 1934, it patented the twin-screw pump with external bearings. Since then Bornemann has achieved and secured a leading position worldwide with its numerous ground-breaking pump developments over the decades. For example, its expertise has resulted in a leadership position of boosting of oil and gas mixtures for onshore, offshore and subsea applications. This method of production results in significant capital cost savings over traditional approaches and simplifies operations.
Bornemann has sales offices and subsidiaries worldwide ensuring there is immediate and professional support throughout all phases of the production process ranging from detailed advice, extending to tailor-made engineering, and finally including reliable maintenance of the installed pumps and systems. Bornemann has the proven expertise and technology to provide a complete system solution. Houston, Texas is the headquarter location of Bornemann’s USA operations.
- USA: Deep Down Inc. Receives Subsea Equipment Orders (mb50.wordpress.com)
- McDermott signs agreement for spool base services in Gulf of Mexico (mb50.wordpress.com)
- Shell Awards Subsea 7 with Two Gulf of Mexico Contracts (mb50.wordpress.com)
- USA: Genesis to Support Shell’s SURF Projects (mb50.wordpress.com)
- USA: FMC Technologies Wins Subsea Systems Contract from LLOG – Who Dat project (mb50.wordpress.com)
- USA: FMC Technologies Provides Subsea Systems for Anadarko’s Lucius Field (mb50.wordpress.com)
- USA: FMC Technologies Inks Global Alliance Agreement with Anadarko Petroleum (mb50.wordpress.com)