US supermajor considers solution for developing fields in storm-prone Gulf of Mexico CHEVRON is considering a floating production, storage and offloading vessel as an alternative field development solution to a spar and semi-submersible for its Jack and St Malo oil discoveries in the ultra-deepwater Gulf of Mexico.
The supermajor has collected estimates from a number of shipyards for a newbuild hull with a 30-year lifespan, which would hold 1.5 million barrels of crude and support oil production of more than 100,000 barrels per day.
The FPSO is part of a screening process by Chevron, which could result in concept selection in the next two to three months. A fully fledged, front-end engineering and design effort could then be launched by the fourth quarter of 2008.
If an FPSO is chosen, it would be the second to be deployed in the US Gulf. The first is being developed by Brazilian operator Petrobras to produce the Cascade and Chinook field discoveries as part of the initial phase of development.
However, both the spar and semisub concepts are still being considered. Chevron is even understood to be looking at a possible floating storage-only solution in combination with a semisub or spar.
The FPSO option would also have to overcome significant cost and engineering hurdles before it was selected. The turret would have to be one of the largest ever constructed to handle the 20 or more riser and umbilical connections, and the risers would probably be of thick-wall construction to handle the expected high pressure and temperature.
The turret complexity has led to thoughts of using a simpler and less expensive permanent mooring system for the FPSO, instead of the more expensive and technically challenging quick-disconnect.
However, the US Coast Guard is understood to prefer quick-disconnect, which allows the vessel to escape an advancing hurricane with its oil cargo intact.
In the case of a permanently moored unit, personnel would be air-lifted from the vessel - a time-consuming process given the fields' remote location - and both the FPSO and the oil inside would be abandoned.
With the Gulf area being threatened by potential storms each hurricane season, the possibility of suspending production and disconnecting several times also diminishes the FPSO's appeal.
Meanwhile, appraisals of both fields are continuing. In a meeting with analysts this month, George Kirkland, Chevron's executive vice president global upstream and gas, said a third well on Jack and the third and fourth wells on St Malo will be drilled this year.
Chevron, headed by David O'Reilly, Chevron's chief executive is taking part in a total of 12 wells in the deep-water Gulf of Mexico this year - six in the Lower Tertiary, five in the Miocene and one in a combination Miocene and Lower Tertiary opportunity.
Chevron said it did not anticipate field start-up until 2012. Field development sanction is anticipated in 2009. Chevron operates both Jack and St Malo and holds 50% and 41.3% working interests, respectively.
Very interesting and informative subject. Personally I have the offshore platform design experience up to about 500 feet water depth in North Sea environment. Could you let us know what the water depth that may be in these CVX potential well sites? I am familiar with the design concepts of SPAR and SemiSub production facilities.
Here is the info on Jack discovery. OKLAHOMA CITY, Sept. 7 /PRNewswire-FirstCall/ -- Devon Energy Corporation (Amex: DVN) announced that its deepwater Gulf of Mexico Jack exploratory well is a discovery. The Jack prospect, on Walker Ridge block 759, encountered more than 350 net feet of pay. The well was drilled to a total depth of approximately 29,000 feet, and is located in 6,965 feet of water. The company expects to conduct additional drilling to further define the extent of the Jack discovery. "Jack is Devon's third discovery in the emerging lower Tertiary trend in the Gulf of Mexico, following Cascade and St. Malo," said Stephen J. Hadden, senior vice president of exploration and production. "This discovery is a result of Devon's focused exploration portfolio and further demonstrates the potential for significant reserve additions and production in the years ahead." Devon increased its acreage holdings in the deepwater Gulf of Mexico in the August 18, 2004, federal lease sale. Devon was the apparent high bidder on 16 deepwater blocks. With the addition of the recent leases, the company holds more than 1.9 million net acres in the deepwater Gulf. This is the largest deepwater Gulf acreage position of any independent exploration and production company. Devon has a 25 percent working interest in the Jack discovery. ChevronTexaco with a 50 percent working interest is the operator. EnCana Gulf of Mexico LLC has the remaining 25 percent working interest.
Thanks for the latest on CVX's Jack & St. Malo discoveries in the Deep Gulf. The project sounds very interesting to say the least. A question if I may... How large are the discoveries? Has CVX verified the find? Have volumetric, quantity and quality analysis been completed? Apparently they have to commit to such a large engineering and development budget. In conjunction with the development of the deep gulf discoveries, is CVX developing any “on shore” unloading, loading and transfer facilities? I understand that there is some expansion activity in the South Texas coast area, specifically in the Port Author area? Any information that you have on verified size, quality and scope of the two finds and associated expansion efforts would be appreciated by all loyal CVX investors. Go Chevron!
The problem with the Jack and St. Malo discoveries isn't with the reserves in place - those numbers are indeed very large. The problem is with the continuity of the reservoirs which leads to the question of how much oil an individual production well would produce. That drives the economics and is still a bit uncertain since the wells will be extremely expensive.