Forum

Deepwater Development: What Past Performance Says About the Future Jarrett Dragani and Maxim Kotenev

From its beginnings in 1897 to its of greater than 1500 m are dened recognized, but it is important to pinnacle as an industry whose sites as ultradeepwater. understand that only with extraordinary are visible from outer space, offshore However one denes deepwater amounts of effort, technical acumen, drilling has pioneered technologies, drilling, it is clear that, compared with risk, and, of course, money, was the given rise to the tallest structures conventional offshore drilling methods, industry able to progress in less than on Earth, transformed the seabed of it presents unique technical challenges 20 years from the rst deepwater US the Earth’s continental shelves into a related to greater water depths, higher Gulf of Mexico (GOM) discoveries manageable fossil-fuel resource, and pressures, manipulating the extra-long in the 1980s to total deepwater GOM provided work for millions of people. riser pipe connecting the wellhead to production surpassing shallow-water Despite innumerable obstacles, the rig (more than 1500 m in the case production by the end of the 1990s offshore drilling has successfully of the Deepwater Horizon ), extreme (Fig. 2). evolved and prospered over the last temperature gradients, and added Records continue to be set around century into its most challenging costs. Steve Terni, chairman of Exxon the world as the industry explores environment yet—deepwater and Neftegas, said in ExxonMobil’s The deeper prospects and dees what would ultradeepwater drilling. Lamp magazine, “Drilling 6 miles from seem to be the limits of technology and In an interview, Malcolm Webb, land beneath frigid waters and !oating economics. One of the planet’s deepest chief executive ofcer of Oil and Gas icepack is like threading the needle in hubs is currently Royal Dutch Shell’s UK, stated there is “no agreed industry the proverbial haystack, from way across Perdido platform in the GOM, !oating denition of what constitutes deep the farm, in a blizzard.” in 2438 m of water and built at a cost of water. When we started in the North USD 3 billion. The deepest operational Sea 30 to 40 years ago, depths of 100 Memorable Moments, platform is Petrobras’ Cascade eld to 700 ft would have been regarded as Record Wells !oating production, storage, and deep water; and, as our abilities and It is no coincidence that offshore crude of!oading facility in Walker Ridge technologies have moved forward, so oil production has become a major part Block 249 in 2600 m of water. the denition of what is deep has moved of the national energy supply in several The Kola Superdeep Borehole, with it. Depths west of Shetland in the UK major countries, notably the United with its pioneering technology in the vary from approximately 500 ft to 6,000 ft States. The offshore industry extends recovery of rock cores, was the deepest plus.” As a matter of convenience, further back in history than many and longest borehole in the world for however, deepwater drilling depths are people realize (Fig. 1). There are, nearly 20 years. But, in May 2008, a new sometimes dened as being greater of course, many more advancements record for borehole length was set by than around 400 m, while water depths in offshore development that can be Transocean’s extended-reach-drilling well, BD-04A, drilled for Maersk Oil in the Al Shaheen oil eld in Qatar. It was drilled in only 36 days to 12 289 m with Jarrett Dragani earned a BS degree in mechanical a record horizontal reach of 10 902 m. In engineering with a specialization in energy and the terms of depth below surface, however, environment from the University of Calgary. He currently the Kola Superdeep Borehole still retains works for Cenovus Energy as a mechanical engineer the world record. supporting design and construction of the Christina Lake Oil More recent successes include those Sands Expansion and has 3 years’ upstream experience of the Sakhalin-1 consortium, operated working across various sectors of the industry in western by Exxon Neftegas. The Odoptu OP-11 Canada. He is a member of the SPE Calgary Section board reached a measured depth of 12 345 m The Way Ahead as well as an editor for SPE’s . and a horizontal displacement of

8 The first oil discovery in deep water transpires at Shallow water operations were the norm Shell Oil Company’s Cognac field, GOM. As with until 1996, when Royal Dutch Shell installed the development of technologies that could adapt ‘Bullwinkle,’ the world’s tallest structure at 1,736 ft from land to sea drilling, Cognac adapts fixed high, standing in 1,350 ft of GOM water. Also in 1996, One of the oldest subsea wells, the Bibi Eibat platform technology from shallow water, which Shell launched ‘Troll,’ in Vats, Norway. ‘Troll’ is not well, comes on stream in Azerbaijan. The well proves economically impractical for moving much as tall, at 1,500 ft high, nor as deep, standing in is located on an artificial island in a shallow farther from the coast, to one that can contend 1,000 ft of water. However, ‘Troll’ is one of the two portion of the Caspian Sea. with deepwater drilling. uman-made objects visible from the moon with the unaided eye, the other being the Great Wall of China.

1897 1947 1982

1923 1975 1996

1961−1982: The first offshore drillship is the CUSS 1 developed for the Mohole project to drill into the Earth’s crust. In 1982, Unocal Corporation drills the first horizontal well in the North Sea.

Kerr-McGee Oil Industries (now Anadarko Petroleum), as operator for partners Phillips Petroleum (ConocoPhillips) and Stanolind Oil & Gas (BP) completes its historic Ship Shoal Block 32 well, Gulf of Mexico (GOM), in October 1947, months before Superior Oil drills a discovery from its earlier-constructed Vermilion platform farther offshore. This makes Kerr-McGee’s well the first oil discovery drilled out of sight of land. Its barge and platform combination is a major breakthrough in drilling-unit design for offshore use. This event marks the beginning of the modern offshore industry as it is known today.

Summerland, California, oil workers notice greater oil yield closer to sea. H.L. Williams comes up with the idea of building a wharf and erecting the drilling rig on it. His first offshore well extends about 300 ft (90 m) into the ocean and, as expected, is a good producer. Before long, entrepreneurs build several more wharfs. The longest stretches over 1,200 ft (nearly 400 m) into the Pacific.

Fig. 1— Memorable moments in offshore oil and gas history.

11 475 m and was completed in only to absolute certainty. Therefore, the next 40 years. This means there 60 days. The Chayvo Z-44 reached companies inherently acquire risk will be great opportunities for a long a measured depth of 12 376 m, the every time they decide to explore time ahead.” equivalent of 23 Ostankino Towers (the and produce oil and gas. Working A second answer to the question tallest freestanding structure in Moscow). under adverse weather conditions concerns economics—or rather, history and in remote areas of the world, with and economics. In the offshore industry, Economics expensive equipment and limited just as in any other, there are many The technological achievements of the knowledge of what lies beneath assumptions and various factors that deepwater industry are impressive, to the Earth’s surface, it would seem feed into the economic assessment. say the least. But, are they !nancially that, in the world of deep water, risk Major factors include !eld size, reservoir successful? After all, economic supersedes reward. quality and "uid quality, water depth viability is the cornerstone of every So why, then, do companies continue and oceanic environment, selection major project. The combination of to pursue deepwater projects all around of drilling and production platform, pro!table economics and solid project the globe? drilling schedule, production schedule, execution generally leads to overall One answer to this question is that production processing, and storage project success. The word “generally” lower-risk conventional oil basins are and handling requirements. Which has been selected with care, lest maturing, and new discoveries in these combination of the aforementioned we forget there is always risk and areas are few and far between. So, parameters will result in economic uncertainty to take into consideration. the industry must turn elsewhere to feasibility is truly unknown because it is In oil and gas, there is uncertainty in !nd new production prospects. John- so particular to each project. However, the exploration process—in trying Morten Godhavn, adjunct professor what can be said is that there are many to categorize the size and scale of at Norwegian University of Science different permutations that do lead to the resource at hand. Geophysicists, and Technology, said in an interview, economic success, and this has been geologists, petrophysicists, and “Big reserves have been found in well illustrated over the years. reservoir engineers operate from a deep waters, in particular in the Gulf In 1987, M.G. Grecco of Unocal limited data set; and, despite having of Mexico, west Africa, east Africa, Corporation wrote a paper for the some of the best technology available and Brazil, but also in the Arctic. Some Offshore Technology Conference titled and unprecedented technical acumen, of the deepwater wells in the Gulf of “Deepwater Development Economics.” they cannot provide anything close Mexico are planned to produce for Grecco’s assessment compared a

Vol. 9 // No. 1 // 2013 9 Forum

for servicing. Webb noted that much of the innovation in the production sector is aimed at overcoming challenges specic to deepwater environments— the combination of low temperatures, high seabed pressures, and gas and water that cause gas hydrates to form. He mentioned well intervention at the sea"oor switches from divers to remotely operated vehicles at about 500 ft, which seems an obvious threshold for deepwater operations. In addition, deepwater offshore areas can encounter long swells, heavy seas, and complex and fast currents that vary in direction and speed. The weather, Fig. 2— Federal offshore oil production in the Gulf of Mexico. Source: Adapted especially during winter, can be severe from the US Energy Information Administration. and lead to temporary suspension of operations. These factors make open- water operations complex, necessitating number of different circumstances drilling operations become even more the design and deployment of based on available information in the pronounced. The offshore drilling sophisticated specialized equipment. GOM at the time, and he concluded industry has responded by designing Altogether, as history shows, that “deepwater elds are technically and constructing larger rigs that deepwater and ultradeepwater feasible to develop and can be economic can reach deeper targets with more development has been a pinnacle provided the oil price and eld size are advanced technologies. Godhaven component of the global oil and gas sufcient ... . [T]he oil price and eld stated that one of the key drilling industry, and all evidence suggests it size are the most signicant factors technologies is the design of horizontal will continue to be so for many years in determining a deepwater eld’s and multilateral wells, which are not new to come. Although deepwater offshore economics.” Of course, since 1987, to the industry but whose application projects are capital intensive, history much of the technology, engineering, has tremendous value for offshore has demonstrated that risks can be and project management tools and skills development. With large costs for managed by the application of new and have improved. What does remain in drilling, and especially mobilizing and old technologies, solid decision-making, today’s climate is a long-term outlook remobilizing equipment, the advent of and exceptional project execution, for high oil prices and many as-yet- multiple horizontal wells being drilled especially in the area of drilling. With undiscovered large offshore elds. So, from a single surface location has global energy demand rising, high oil it remains highly likely that offshore been paramount. prices for the foreseeable future, and economics, despite risks, will seek to On the production side of the large offshore elds being discovered, provide adequate, if not outstanding, business, engineers are challenged by the question now becomes, “Where nancial returns for many years to come. operating with a limited reservoir data will deepwater development take set and limited ability to access wells us next?” TWA Key Factors Contributing to Advancement of Offshore Maxim Kotenev Development Into Deep Water is a reservoir geoscientist at Fugro Robertson in the UK, performing geological, dynamic Drilling for and producing modeling, and integrated exploration and eld development hydrocarbons from reservoirs studies. Previous responsibilities include geological and thousands of feet below sea level is not reservoir engineering work with Lukoil, Rosneft, and an easy feat under any circumstance. Technical University of Berlin, Germany. Kotenev was the Several major challenges have stymied president of the Ufa SPE Student Chapter and currently further technological development, serves as vice-chair of the SPE London Section YP and many challenges will continue to Committee. He has coauthored 15 technical papers. Kotenev earned BS degrees in present barriers to growth in the future. petroleum engineering and petroleum economics and management from Ufa State Of course, as reservoirs get more Petroleum Technological University, Russia; an MS degree in petroleum geoscience complicated to drill through and from the University of Manchester, UK; and a PhD in petroleum engineering from the exploration activities move deeper, Academy of Sciences, Moscow. the challenges for safe and productive

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