A new year will bring online several new deepwater development projects in the Gulf of Mexico (GoM). These new projects and increased spending in the deepwater GoM and abroad continue to demonstrate the deepwater resurgence.

In its Annual Energy Outlook 2014, the US Energy Information Administration projected that offshore crude oil reserves will provide a steady supply of domestic crude oil production, ranging between 1.6 MMb/d and 2.0 MMb/d from 2015 to 2040, as the pace of development activity quickens and new, large development projects – predominantly in the deepwater and ultra-deepwater portions of the GoM – are brought into production.

Three GoM deepwater developments – Anadarko’s deepwater Lucius and Heidelberg “mega projects” and Shell’s Mars B platform – are prime examples of recent developments in the area that are nearing the finish line or have recently crossed it.

In addition to the Lucius and Mars B projects ramping up, Chevron also plans to start up new operations in the GoM. In a 4Q 2013 earnings conference call, Chevron CEO James Watson said the Jack/St. Malo development is on schedule for startup later this year; its Bigfoot development will go online in early 2015.

GoM Lucius, Heidelberg near completion

Installation of the Lucius truss spar, rated to produce up to 80,000 b/d of oil, has been completed in the Keathley Canyon area of the GoM in a water depth of 2,164 m (7,100 ft). With a spar diameter of 34 m (110 ft), a length of 184 m (605 ft), and a hull weight of 23,000 tons, the Lucius is the largest spar built to date by Anadarko, according to a company release.

The Lucius topsides are due to be towed to the field location for installation on the spar hull in 1Q this year. According to Anadarko, the project is on schedule to produce first oil in the second half of this year – less than three years from project sanction. The Lucius field was discovered in 2009, and the project was sanctioned two years later.

Oil will be exported to shore through 161 km (100 miles) of recently installed 18-in. pipeline and through approximately 80 km (50 miles) of repurposed existing pipeline, according to the company’s release. Gas will be exported through 370 km (230 miles) of 20-in. pipeline.

At Anadarko’s Lucius spar lookalike, the Heidelberg development in the deepwater Green Canyon area of the GoM, fabrication of the spar hull is now more than 70% complete. Heidelberg also is rated to produce up to 80,000 b/d of oil. Anadarko plans to start drilling the first development well on Heidelberg during 1Q this year, and first oil is expected in mid-2016.

Production at Mars B commences

Production from Shell’s second Mars B field recently began using what the company says is the seventh and largest floating platform in the GoM. Mars B is being produced via the Olympus tension-leg platform (TLP), which was installed last summer. The facility represents another step up in the scale of TLPs used in the GoM at 126,000 tons, compared with 98,000 tons for the Ursa TLP and 55,000 tons on the original Mars TLP. From the base of the hull to the top of the drilling derrick on Olympus is 123 m (406 ft).

Shell added that it is the first GoM deepwater project of its kind to significantly expand an existing oil field. The project is located in Mississippi Canyon at a water depth of 945 m (3,100 ft), with the Olympus TLP having 24 vertical access well slots for the Mars B structure and further allowing for the tieback of two other fields – West Boreas and South Deimos – via an export pipeline to the West Delta 143 C platform just off the Louisiana coast. Olympus is positioned within a few miles of the company’s other production platforms, Mars and Ursa.

Combined reserves from Mars and Olympus of up to 1 Bbbl of oil should extend production from Mars to 2050.

John Hollowell, executive vice president of deepwater for Shell Upstream Americas, pointed out that the Olympus platform installation was achieved six months ahead of schedule, allowing for an earlier first oil date.

Using a platform rig at Olympus and another drilling unit, Shell forecasts production from Mars B will increase to 100,000 boe/d by 2016.

Discovery of the original Mars field was in 1989, and production started seven years later. The Mars field reservoirs are at a subsurface depth of 3,050 m to 6,700 m (10,000 ft to 22,000 ft). Shell operates Mars B with 71.5% interest, and BP holds 28.5%.

This year Shell also is due to bring onstream the Cardamom field, adding another 50,000 boe/d of production. Work also is under way on the ultra-deepwater Stones development – operated by Shell with 100% interest – following a final investment decision in May 2013.

Deepwater spending surges

Expenditure on deepwater projects after 2016 is expected to surge following a slight lull in the preceding two years, according to the latest figures from Douglas-Westwood energy industry analysts.

Global deepwater spending is set to rise 130% to US $260 billion over the next five years as compared to the previous five-year period, according to the new forecast. According to the analysts’ “World Deepwater Markets Forecasts for 2014 to 2018,” deepwater expenditure figures will be driven by projects in West Africa and the Americas.

“Africa and the Americas continue to dominate deepwater capital expenditure (capex), with $213 billion set to be spent over the next five years,” said the report’s author, Balwinder Rangi.

Separating the world’s major deepwater markets – Africa, North America, and Latin America – Rangi said Africa is set for the greatest growth. “East African natural gas developments begin production and become more prominent in the latter years of the forecast period,” Rangi said in the report. “Latin America will remain the largest market, and North America is expected to experience the least growth.”

Rangi also pointed out that Douglas-Westwood had identified a “temporary trough in global expenditure in 2015” that was primarily driven by delays to delivery of floating production and storage units in Latin America. “African projects have also experienced delays, resulting in a surge in capex from 2016 onwards,” he wrote.

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