ConocoPhillips has an active program underway to tackle areas of technology it has identified where continual improvements—rather than complete “blue sky” concepts—are required for it to produce in increasing water depths and higher pressures and temperatures around the world.

The U.S. operator has sunk a lot of its time in recent years into establishing its core position in the North American unconventionals sector, with deepwater areas—while certainly not ignored—on something of a slow burner. As it looks to the long term, however, the company has adjusted its focus accordingly.

According to John Vicic, a man with long industry experience who is manager of the operator’s deepwater technology program, “For ultimate growth, we are looking to deepwater.”

Technology challenges

Vicic was speaking in a special U.S. Gulf of Mexico (GoM) focus session at the Offshore Northern Seas (ONS) event in Stavanger, Norway, organized by INTSOK, the Norwegian government and industry-backed oil and gas trade organization.

In his presentation titled “Deepwater Technology Gamechangers,” he outlined how ConocoPhillips—which is now a fully focused upstream operator with the spinoff in 2012 of its refining operations to Phillips 66—is focused both internally and via various industry collaborations on identifying and tackling the most pressing technology challenges.

Last year it spent heavily to ramp up production, specifically in the U.S., but that was thanks largely to continuing growth in its Lower 48 unconventional assets in the Permian Basin, Eagle Ford and Bakken shale plays. As a result, it grew its total production by about 7% in its Lower 48 segment last year, including 24% growth in domestic crude oil production. By year-end 2014 ConocoPhillips expects to be producing up to 1,600 MMboe/d as a company worldwide.

Upping its game

Vicic, however, said the company believes deepwater holds the key to future production growth. He admitted that in recent years it had essentially been a “nonoperating partner” in its deepwater U.S. GoM projects. But, he continued, it has now stepped up its game.

Highlighting the largest oil and gas discoveries made by the industry in recent years, he pointed out that the vast majority had all been made in deepwater where—although the wells are very expensive to drill—they required the fewest wells due to their impressive reservoir productivity, especially when compared to unconventional bores.

Faced not only by the extreme water depths but also reservoir pressures ranging from 8,000 psi to 25,000 psi and temperatures of between 66 C and 191 C (150 F and 375 F), ConocoPhillips has undertaken detailed analysis of the technology gaps, he said.

In the exploration arena Vicic flagged up ongoing efforts to try to “translate” the experience gained offshore Norway with chalk and carbonate reservoirs and with HP/HT fields to use that knowledge in the GoM. He also highlighted the increased need for more capable AUVs and ROVs to work and monitor in the extreme depths for extended periods of time, mentioning Liquid Robotics’ Wave Glider autonomous unit as an example.

Developing digital oilfield solutions with integrated sensing was another key area of focus, he said, as well as creating real-time data centers.

In terms of drilling and completion advances, Vicic also highlighted that the company is evaluating and qualifying managed-pressure drilling for future deepwater drilling systems for efficiency and better well control.

Flow assurance focus

In the production sector he listed several key issues to be tackled to specifically improve flow assurance, including advances that would be required when dealing with asphaltenes, hydrates, scale and corrosion. Asphaltenes, in particular, were highlighted by Vicic as an aspect of flow assurance that he felt would be crucial to deal with.

He also acknowledged the potential for improved subsea boosting and processing solutions, both on the seabed and downhole. “It’s the key—we are working on it by ourselves and also with others,” he said.

Virtually every presentation at ONS this year included ongoing efforts by the industry to control spiraling costs. Vicic was no different, pointing out that goals such as greater standardization are required by operating companies along with more industry collaboration.

20K collaboration

As an example of the latter, he highlighted the recently announced 20K joint development project, to which ConocoPhillips belongs along with BP, Shell and Anadarko, all working with FMC on next-generation standardized subsea production equipment.

“This is looking at everything from the wellhead to the HIPPS [high-integrity pressure protection system],” he said. With the program expected to initially cover “about a three-year period,” it is focusing on items including 20,000-psi trees, jumpers, flowlines and HIPPS. “We are also as a company working on 20K drilling systems,” he added.

With an expected 3% to 5% production growth rate for the company in 2014, ConocoPhillips is looking to maintain that rate beyond 2017-18 and is focused on organically growing its portfolio. That will increasingly see it take more operator positions in developments than it has in recent years.

In the GoM, Vicic admitted that the company is not really an operator at present (although it is elsewhere), but overall he commented, “We are just coming back into deepwater—I think we’re one of the leaders. We’re the second-biggest leaseholder in the GoM, and most of that is in deepwater and high-temperature leases.”

Testing deepwater potential

This was echoed by ConocoPhillips’ CEO Ryan Lance, who spoke at the Barclays CEO Energy Conference.

Lance waxed lyrical on the company’s North American unconventionals portfolio of the Eagle Ford, Bakken and Permian before taking time to highlight how it is testing out the potential of its deepwater assets in the GoM, Angola, Senegal, Nova Scotia, Norway, Myanmar, Australia’s Browse Basin and Malaysia.

In the latter, for example, it expects to be producing more than 60,000 boe/d by 2017 from its deepwater assets, including the Gumusut-Kakap and KBB developments, with the former having only recently started flowing oil via its semisubmersible production facility and the latter due to start production during fourth-quarter 2014. It also has Siakap North-Petai in Malaysia, which began flowing recently. “This is very high-margin oil production offshore Sabah Island in the deepwater province,” Lance said.

GoM focus

In the U.S. GoM the company is currently involved in the appraisal of four major discoveries, Lance said. “We are really focused on the Lower Tertiary, the Paleogene where we’ve had four discoveries, Tiber where we own an interest—we will be appraising that this year,” he said. “[At] Gila, the most recent of the Tertiary-Lower Paleogene discoveries, we have a rig coming to do some appraisal this year as well. [At] Shenandoah, which was another 2009 discovery pre-Macondo, we have drilled an appraisal well. [We] found over 305 m (1,000 ft) of net pay. So we are pretty excited about what the upside and opportunity looks like at Shenandoah. And then finally Coronado, which was also a discovery a few years ago, and we are on that particular asset right now doing appraisal testing as well. So we are excited about what the deepwater Gulf of Mexico has in store.”

Across the Atlantic

Lance also highlighted what the company is doing across the Atlantic off the west coast of Africa in the conjugate margin to the subsalt Santos Basin offshore Brazil. In the frontier Kwanza Basin offshore Angola ConocoPhillips has two blocks, 36 and 37, where it is the operator with 50% and 30% stakes, respectively.

ConocoPhillips spudded an initial exploration well (Kamoxi-1) in Block 36 during August. With a four-well commitment, it will drill two wells in each block. Blocks 36 and 37 are adjacent to Blocks 20 and 21, where the play-opening Orca, Lontra, Mavinga, Cameia and Bicuar discoveries have been made by Cobalt International Energy.

“You can see they’re offsetting some of the recent discoveries in Angola, which have kind of de-risked the petroleum system, which is good. We are playing that subsalt carbonate reef buildup play that’s been successful in the Santos Basin on the Brazilian side,” Lance said.

For ConocoPhillips (like many of its peers) deepwater remains by its very nature a technology-intensive discipline but one which—for those companies that develop and harness their capabilities—enables them to compete strongly for frontier opportunities around the world.

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