Deepwater Gulf of Mexico 2004: America's Expanding Frontier
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ERRATA Figure 1 P. 4, The colored areas marked as “Royalty Relief Zones” are water-depth zones that correspond with Deep Water Royalty Relief Act (DWRRA) water depths. Not all leases within a colored area are eligible for royalty relief due to the different vintage leases included in the area. In addition, please note that the colored areas extend past the official royalty relief area authorized by the DWRRA and that leases east of 87 degrees, 30 minutes West longitude in the Eastern Planning Area are not eligible for royalty relief. P. 112, last line, “51%” should read “48%.” Appendix B P. 125, line 2, clarification: the Pardner project may appear to be the first deepwater discovery because it was combined with a field discovered in water depths less than 1,000 ft. The shallow-water portion of the WD152 field was indeed discovered in 1968, but the deepwater portion of the field (the Pardner project) was not drilled until 2002. Appendix H P. 150, line 12, column 5: “2.7” should read “12.7.” P. 150, line 13, column 5: “3.4” should read “13.4.” P. 150, line 14, column 5: “2.8” should read “12.8.” ON COVER – The cover features four images of the deepwater frontier (top to bottom). Transocean’s deepwater drillship Discoverer Deep Seas, which set a world record drilling in 10,011 ft of water at ChevronTexaco’s Toledo prospect (photo courtesy of Transocean). A sperm whale surfaces near BP’s Horn Mountain spar and Heerema’s construction vessel Balder (photo courtesy of Christopher Richter). The Na Kika semisubmersible, installed by Shell and operated by BP, which will gather production from six subsea projects by the end of 2004 (photo courtesy of Shell International Exploration and Production Inc. and BP). An artist’s rendering of subsea equipment installed at a deepwater location (image courtesy of Shell International Exploration and Production Inc.). OCS Report MMS 2004-021 Deepwater Gulf of Mexico 2004: America’s Expanding Frontier Authors G. Ed Richardson Leanne S. French Richie D. Baud Robert H. Peterson Carla D. Roark Tara M. Montgomery Eric G. Kazanis G. Michael Conner Michael P. Gravois Published by U.S. Department of the Interior Minerals Management Service New Orleans Gulf of Mexico OCS Region May 2004 Table of Contents Page PREFACE....................................................................................................................................................xi INTRODUCTION ........................................................................................................................................1 BACKGROUND ..........................................................................................................................................3 Definitions..............................................................................................................................................3 Expanding Frontier.................................................................................................................................5 Seismic Activity .....................................................................................................................................6 Exploration Activity ...............................................................................................................................6 Leasing Activity ...................................................................................................................................13 Environmental Activity ........................................................................................................................21 Ocean Current Monitoring ...................................................................................................................23 Challenges and Rewards ......................................................................................................................26 LEASING ...................................................................................................................................................37 Bidding and Leasing Trends.................................................................................................................37 Lease Ownership ..................................................................................................................................42 Future Lease Activity ...........................................................................................................................42 DRILLING AND DEVELOPMENT..........................................................................................................47 Drilling Activity ...................................................................................................................................47 Development Systems ..........................................................................................................................58 Subsea Trends.......................................................................................................................................70 New Pipelines.......................................................................................................................................70 RESERVES AND PRODUCTION ............................................................................................................75 Discoveries ...........................................................................................................................................75 Reserve Potential..................................................................................................................................82 Production Trends ................................................................................................................................84 Companies and Production...................................................................................................................90 Production Rates...................................................................................................................................90 SUMMARY AND CONCLUSIONS .......................................................................................................101 Development Cycle ............................................................................................................................101 Drilling the Lease Inventory...............................................................................................................107 Expanding Frontier.............................................................................................................................111 CONTRIBUTING PERSONNEL.............................................................................................................115 REFERENCES .........................................................................................................................................117 iii Table of Contents — continued Page APPENDICES ..........................................................................................................................................119 Appendix A. Announced Deepwater Discoveries (Sorted by Project Name). .................................119 Appendix B. Announced Deepwater Discoveries (Sorted by Discovery Date). ..............................125 Appendix C. Chronological Listing of GOM Lease Sales by Sale Location and Sale Date............131 Appendix D. Deepwater Studies Program........................................................................................133 Appendix E. Companies Defined as Majors in this Report. ............................................................135 Appendix F. Number of Deepwater Production Facilities Installed Each Year (including Plans through 2006)...................................................................................139 Appendix G. Subsea Completions....................................................................................................140 Appendix H. Average Annual GOM Oil and Gas Production. ........................................................149 iv Figures Page Figure 1. The Gulf of Mexico OCS is divided into Western, Central, and Eastern Planning Areas. Water-depth categories used in this report are shown in addition to shaded Deep Water Royalty Relief Act zones.................................................................................... 4 Figure 2. Progressive deepwater 3-D seismic permit coverage. ............................................................ 7 Figure 3. Deepwater Gulf of Mexico 3-D seismic permit coverage from 1992 to 2003........................ 9 Figure 4. Pre-stack depth migration coverage from various industry sources. .................................... 10 Figure 5. Stratigraphic chart highlighting new play potential.............................................................. 11 Figure 6. Frontier plays in the deepwater GOM. ................................................................................. 11 Figure 7. Location of known gas hydrates in the Gulf of Mexico. ...................................................... 14 Figure 8. Gas hydrates on the seafloor in Green Canyon Block 185 (photo courtesy of GERG/Texas A&M University)............................................................. 15 Figure 9. Deepwater leases issued in the Gulf of Mexico.................................................................... 16 Figure 10. Active leases in the Gulf of Mexico. ...................................................................................