“Deepwater is back in vogue.” (Pablo Medina, Welligence)
“Newer deepwater projects have the attributes oil and gas companies are looking for: longer-term production, lower breakeven costs, big resource potentials and lower carbon emissions.” (Medina)
Capital spending on all-new deepwater drilling is poised to hit a 12-year high next year (Rystad)
Investment in all-new and existing deepwater fields could hit $130.7 billion in 2027, a 30% jump over 2023 (Rystad)
Deepwater resources offer lower carbon emissions intensity than shale and other tight oils, averaging 2kg of carbon dioxide per barrel less than shale. (Rystad)
“The return of offshore and deepwater operations is going to be a big topic at OTC, and Namibia is going to be talk of the show.” (James West, Evercore)
Enthusiasm for offshore has climbed with discoveries and technology breakthroughs. Namibia’s Mopane is forecast to hold as much as 10 billion barrels of oil. (Portuguese oil company Galp Energia)
Rates for some rigs have surpassed $500,000 a day and contract durations are lengthening as supply dwindles.
The government’s decision to require that a capping stack be located in Guyanais prudent. Although the need for a capping stack is dependent on multiple barrier failures and is thus extremely low, the environmental and economic consequences of a prolonged well blowout warrant timely access to this tertiary well control option.
A capping stack must be properly maintained and deployable without delay. In that regard, BSEE has a good program for testing Gulf of Mexico capping stack readiness. Capping stack drills are an important post-Macondo addition to the unannounced oil spill response program that dates back to 1981.
“Troy Naquin, BSEE New Orleans District, observes as a capping stack is carefully lowered onto the deck of ship to be transported more than 100 miles offshore for a drill designed to test industry’s ability to successfully deploy it in case of an emergency, May 8, 2023.” BSEE photo/Bobby Nash
Havtil prioritizes risk assessment and publishes their comprehensive annual analysis of safety trends in a timely manner. The 2023 RNNP was posted in Norwegian earlier this year and the summary report is already available in English. RNNP reports are an important safety resource that should be reviewed and discussed wherever oil and gas operations are conducted.
As an example of the breadth of these reviews, the two sets of charts below convey data that are not typically documented by offshore safety regulators. The first set documents near-misses that did not result in injuries, but did expose workers to that risk.
The second set of charts is a summary of worker responses to a survey, a means of assessing the safety culture. The big jump in favorable responses to the HSE questions is encouraging. In particular, the report notes (p. 14) that responses to a question about being pressured not to report incidents has moved in a positive direction in the last two surveys. Hopefully, this is an industry-wide trend.
The Valaris DS-17 drillship is now on location to drill the Algerich-1 well for Equinor 315 km from Mar del Plata in 1527 m of water at Block CAN 100.
Concurrently, at the opposite end of the Pan American continents, the Stena DrillMAX is closing in on Exxon’s Orphan Basin location offshore Newfoundland to drill another high potential well.
As reported in January, United Oil and Gas received a 2 year extension from the Government of Jamaica on their Walker Morant License. Below is a United video produced for prospective partners.
While the investment risk is undeniable, the reward potential is high.
Below is an interesting slide from the United presentation that compares the government’s take of production revenues for various African and S. American nations.
The Adjusted Delayed Value (ADV), which takes into account the effects of delaying bonuses and future royalty payments, ranged from 1.3 to 9.2 times the high bids.
Perhaps the closest calls were Chevron’s two Walker Ridge bids which had ADV to bid ratios of only 1.3 to 1.4.
The main concern going forward is the absence of a consistent, predictable leasing schedule for the 3.7% of the OCSthat may be considered for leasing. BOEM’s new methodology, which will be applied at the next lease sale (whenever that might be), does not require the bureau to estimate the delay period between the sale being evaluated and the projected next lease sale. Given that the new 5 year plan calls for a maximum of 3 lease sales, the gap between sales has become a much more significant factor just as the new guidance is being implemented.
The new 5 year “leasing plan” is intended to restrain OCS production in deference to “net zero” pathways. This strategy discourages interest from exploration and production companies. US offshore leases, which are by far the world’s smallest, are even less attractive when you don’t know if and when you will be able to acquire the nearby tracts that may be needed for economical deepwater development. This is not the way to obtain fair market value for public resources.
Block
No. of bids
High Bid ($)
MROV($) ADV($)
High Bidder
MROV/bid ADV/bid
MC 711
1
584,700
6,600,000 2,400,000
bp
11.3 4.1
MC 896
1
641,628
6,100,000 1,600,000
Shell
9.5 2.5
GC 182
1
800,085
3,900,000 2,600,000
Anadarko
4.9 3.2
GC 183
1
800,085
9,100,000 6,000,000
Anadarko
11.4 7.5
GC 226
1
800,085
2,100,000 1,600,000
Anadarko
2.6 2.0
GC 227
2
974,628
13,000,000 9,000,000
Shell
13.3 9.2
GC 345
1
1,095,615
13,000,000 5,300,000
Murphy
11.9 4.8
GC 346
1
845,815
5,100,000 2,000,000
Murphy
6.4 2.4
GC 549
1
800,085
15,000,000 6,900,000
Anadarko
18.7 8.6
AT 237
1
909,899
8,300,000 3,000,000
Equinor
9.1 3.3
WR 285
1
859,837
6,200,000 1,200,000
Chevron
7.2 1.4
WR 329
1
595,837
4,400,000 770,000
Chevron
5.7 1.3
MROV=Mean of the Range-of-Value ADV=Adjusted Delayed Value, which takes into account delaying bonuses and royalties
The DrillMAX is en route from Guyana to drill the Persephone wildcat well 500 km NE of Newfoundland in the highly prospective Orphan basin (3000 m water depth). This looks like the farthest from shore any well has been drilled in the Atlantic. The late spring date is prudent.This is definitely a well to watch because of the resource potential and difficult operating conditions.
Bud's Offshore Energy (BOE) 