Deepwater Projects And Environments

Worldwide Deepwater Activity

The market for deepwater rigs and the subsequent levels of drilling activity are influenced by the types of wells envisioned for various projects.

• Exploration and appraisal wells are drilled to gather information about the subsurface, and to establish the presence or extent of a reservoir. In deepwater, these are usually vertical, drilled from floating Mobile Offshore Drilling Units (MODUs) positioned directly over their target formations.
• Development wells are drilled in already discovered reservoirs. Like exploration and appraisal wells, they can be drilled vertically from an MODU. But they can also be drilled directionally or horizontally, either from permanently moored floating production platforms, or as one of several wells clustered on a subsea template.

Rig Supply, Demand and Cost

Offshore Magazine (July 2007), in its “2007 Worldwide MODU Construction/Upgrade Survey,” reported 75 rigs under construction or being rebuilt/upgraded for water depths of 2,000 ft or deeper. Six of these rigs (two semisubmersibles and four drillships) are rated for 12,000 ft water depth, and are scheduled for delivery in 2009.

The demand for semisubmersible rigs and drillships with the highest capabilities began exceeding supply in 2000; by 2006-2007, oil company operators were paying dayrates on the order of $400,000 to $500,000. At the upper end of the cost scale, one operator signed a contract in late 2007 for a high-specification deepwater rig at a dayrate of $600,000 for work in the Gulf of Mexico to begin in 2009. Lesser units, which are more restricted in maximum water depth and load-bearing capacity, may still command dayrates of $200,000 to $350,000.

The high-capability units typically are under multi-year contracts to individual operators, who probably commissioned and underwrote the construction of the rigs. In January 2007, oil companies had MODUs capable of drilling in waters greater than 5000 feet under lease for a total of 1,430 months, or 119 future rig years. At 2006 dayrates, a single deepwater exploration well can have a price tag of $100 million or more, although that is the upper range. Well costs tend to increase with greater water depths and greater well target depths below the seafloor (mudline). Operators in the Gulf of Mexico have begun targeting formations lying more than 20,000 feet [6096 m] below the seafloor in water depths of ,7000 to 8,000 ft, giving occasional total well lengths of 28,000 to32,000 ft.

The per-well drilling cost for development wells tends to be somewhat lower than that of exploration or appraisal wells because of existing information and the learning-curve effect. On the other hand, completion costs are a significant addition to the total well cost. Operators can use batch-drilling techniques to reduce development well costs, and they are constantly looking for ways to reduce the time it takes to drill a well. With day rates being what they are, saving several hours on a single task and several days on an entire well represents a significant cost reduction.

Safety and Quality

As with any drilling project, safety and quality are of paramount importance in deepwater. Every operator and contractor strives for a zero accident rate and takes extraordinary measures to achieve it through training, development of safe procedures, careful supervision, equipment specification, and a maintenance program. The equipment and control systems aboard a modern, deepwater MODU or production platform typically reduce the exposure of the drilling crew to drilling hazards to a fraction of what it was even 10 years ago.

A well must be drilled to a quality standard that enables it to fulfill its purpose. An exploration well must enable the operator to obtain logs and other formation data, and, in some cases, to flow-test a discovery. Development wells must provide high-quality completion zones that allow fluids to pass freely out of the formation into the well or from the well into the formation at the specified rates. Wells that cannot deliver the specified flow rates may never pay back the costs to drill them.

Deepwater drilling and field development projects have been the most interesting and exciting segments of the offshore industry for several years. They have also absorbed much of the industry’s total capital expenditure and have been generating an increasing share of its revenues.

Areas of Activity

Most areas of offshore activity have seen some deepwater drilling, but the bulk of the action is concentrated in three regions:

• Gulf of Mexico
• Campos Basin and a few other areas offshore Brazil,
• West Africa, from the Gulf of Guinea south to Angola

The North Sea also participates in deepwater drilling, and because of the harshness of the climate, it makes sense there to lower the deepwater threshold to 1,000 ft. In Southeast Asia off the island of Borneo, oil has been found in water depths greater than 2,000 ft. And offshore in Egypt’s Nile Delta region, deepwater drilling has discovered commercial reserves of natural gas in depths beyond 2,000 ft.

Gulf of Mexico

Figure 1 shows Deepwater discoveries in the Gulf of Mexico by year, while Table 2 lists some of the more significant discoveries in terms of water depth. Note the dramatic increase that occurred in 1987 with the Coulomb/Na Kika discovery.

Gulf of Mexico drilling results through 2005, as listed by the U.S. Minerals Management Service, include 13 discoveries in water depths from 8,000 to 9,000 ft and five discoveries in depths greater than 9,000 ft; the deepest of these was the Trident discovery in 9,743 ft of water (French et. al, 2006).

As of early 2008, the water depth record for drilling—worldwide as well as Gulf of Mexico stood at 10,011 ft. This record was set in 2003 by the Transocean drillship Discoverer Deep Seas.

Brazil

During the late 1980s and into the 1990s, Brazil became the second major laboratory for deepwater technology development, and the state oil company (Petrobras) set many drilling records. Urged on by Brazil’s drive to become self-sufficient in oil production, Petrobras became the leading user of subsea-completed wells tied back to floating production systems as a means of bringing new discoveries onstream quickly. Having developed this early production technology in shallower water, Petrobras was able to use it with great confidence to develop fields in water depths ranging from 1,000 ft to over 5000 ft during the 1990s. Operators continue to discover and develop new Deepwater fields in Brazil’s offshore basins. (Figure 2)

West Africa

Having observed similarities between Brazil’s marine geology and that of West Africa, oil companies began to explore the Deepwater basins in the Gulf of Guinea during the 1990s. They discovered a series of large fields in water depths from 1000 to 5000 feet [305 to 1524 m], particularly in Angolan and Nigerian waters, but also off of smaller countries such as Equatorial Guinea. (Figure 3).

West African deepwater activity is characterized by a substantial number of very large field development projects based primarily on subsea wells tied back to floating production platforms. More recently, interest in deepwater prospects has extended northward from the Gulf of Guinea to the coastal waters of Mauritania and Morocco.

Levels of Activity

One gauge of the level of deepwater activity is the number of rigs drilling in various locations and water depths. Offshore Magazine (2006) listed 101 rigs capable of operating in water depths greater than 4000 ft (70 semisubmersibles and 31 drillships). At the time of writing, several of these units were under construction and due for delivery by 2008. Thirty-one of these rigs are rated and equipped for drilling in waters deeper than 8,000 ft.

French et. al (2006), in their MMS Report “Deepwater Gulf of Mexico 2006: America’s Expanding Frontier,” noted that in 2005, there were 126 Deepwater rigs operating worldwide in depths exceeding 1,000 ft, and distributed among the Deepwater regions as shown in Figure 4.

This report also provides a breakdown of all Deepwater rigs by maximum water-depth capabilities, as shown in Figure 5, although the authors do not explain the discrepancy between the total number of rigs included in the depth capability classification and the number included in the geographical distribution.

The Gulf of Mexico is clearly the world’s leading deepwater region, accounting for 31 percent of all deepwater rigs in service, and 45 percent of rigs capable of drilling in water depths greater than 5000 ft.Palathingal and Wright (2006) reported in the September 2006 issue of Offshore that there were 176 units in the floating drilling rig fleet. So it is clear that between 57 and 79 percent of the floating MODU fleet is capable of operating in deepwater, depending on the threshold that is used. The only floaters not rated for at least 1000-ft water depths are older units that have not been upgraded, and perhaps a majority of those rigs are semisubmersibles working in the North Sea and East and Southeast Asia.

French et. al (2006) observed the following trends in the Gulf of Mexico::

• From 1992 to1997, the average number of active deepwater rigs increased steadily, from three to 26. The number of deepwater wells drilled each year likewise increased from 32 to 176. During this period, twenty-five wells were drilled in water depths greater than 5,000 ft, and one well exceeded 7,500-ft water depth.
• From 1998 to 2000, the number of rigs working and deepwater wells drilled leveled off.
• From 2001-2005, the number of deepwater rigs operating in the Gulf reached an all-time high of 41 in 2001, while the number of wells drilled hit 211 (59 in water depths of 5000 ft or more and six in water depths greater than 7,500 ft). By 2005, the number of deepwater wells drilled had declined to 119.

The decline in total wells in the Gulf of Mexico from 2001 to 2005 corresponds with a shift of activity to West Africa, where operators have been drilling production wells for a growing number of large deepwater field developments.

The Gulf of Mexico is still the scene, however, for the most challenging wells in the greatest water depths. An increasing number of these wells in depths greater than 5,000 ft are targeting formations that lie below thick salt sheets and are 15,000 to 20,000 feet below the seafloor, giving a total well depth from the surface of 25,000 to 30,000 feet. Plans are being made to drill in water depths to 12,500 feet.