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Posts Tagged ‘Contango’

The Honor Roll companies for 2022 (listed alphabetically) are Anadarko (Oxy), bp, Cantium, Chevron, Contango, Hess, LLOG, Murphy, and Shell.

Our criteria:

  • Must average <0.3 incidents of noncompliance (INCs) per facility-inspection.
  • Must average <0.1 INCs per inspection-type. (Note that each facility-inspection may include multiple types of inspections (e.g. production, pipeline, pollution, Coast Guard, site security, etc). On average, each facility-inspection included 3.25 types of inspections in 2022. Here is a list of the types of inspections that may be performed.)
  • Must operate at least 3 production platforms and have drilled at least one well (i.e. you need operational activity to demonstrate compliance and safety achievement).
  • May not have a disqualifying event (e.g. fatal or life-threatening incident, significant fire, major oil spill). Due to the extreme lag in updates to BSEE’s incident tables, investigation and news reports are used to make this determination.
  • Pacific and Alaska operations will be considered separately.
oil (million bbls)gas (BCF)
Shell145.8163.5
bp82.457.1
Chevron79.445.2
Anadarko59.650.8
Murphy28.145.5
LLOG19.634.3
Hess17.939
Cantium3.95.3
Contango0.023.5
2022 production through Oct.

Mid-Year 2022 review

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Offshore gas has important environmental advantages, particularly nonassociated gas-well gas (GWG). While the GoM production chart (below) is not pretty, there are signs that gas production may have bottomed and is slowly rising. This is largely due to growth in oil-well gas (OWG) associated with deepwater oil production.

A successful offshore program requires a mix of strategies, and it is encouraging that companies are still pursuing natural gas on the GoM shelf. The second chart (below), based on BOEM data, shows 2022 YTD (probably through Oct.) GWG production for the 11 companies that (1) produced more GWG than OWG and (2) produced more than 1 BCF of GWG.

Interestingly, 100% of the gas produced by Contango, Samchully, and Helis in 2022 was from gas wells. Contrast this with bp, the third largest GoM gas producer. None of bp’s gas production was from gas wells.

One has to wonder about the extent to which deepwater gas reservoirs are being stranded due to the less favorable economics. Preventing such resource losses was once an important regulatory consideration given the conservation mandate in the OCS Lands Act and the importance of maximizing the public benefit. However, current policy, as expressed in the proposed 5 year leasing plan, is to phase out offshore production rather than sustain it. This is difficult to reconcile.

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Lars Herbst analyzed GoM permitting and drilling activity from 2011 to 2021. His data and observations are summarized below.

  • Shelf (shallow water) exploratory drilling is at historic low levels with only a single exploration well drilled in both 2020 and 2021. That trend appears to have continued into 2022, as only one shelf exploration well (drilled by Contango) has been spudded YTD.
  • 2021 also saw a significant drop in deep water development wells.
  • Over the time period examined, deep water development is led by deepwater exploration. The same cannot be said for the development of shallow water leases where prospects are more mature and data are more available.
  • The only shelf well drilled in 2021 (Walter Oil and Gas) was in relatively deeper water (566 feet). That well was drilled with a deepwater semisubmersible (the Valaris 8503). This is the shallowest water depth for a GoM semisubmersible drilling operation in recent history. The rig had a modified DP/moored configuration with explosive disconnects on the mooring lines so the rig could move off location if needed during an emergency disconnect scenario. That mooring disconnect would also let the rig evade hurricanes without the need for anchor handling vessels. 
  • The 2012 spike in deepwater permit approvals is the result of the Macondo drilling moratorium backlog.
GOM OCS New Drilling Well Permits and Well Spuds 2011-2021
YearNew Shallow Water Drilling Well Permits ApprovedShallow Water Expl.; New Well SpudsShallow Water Dev.; New Well SpudsNew Deep Water Drilling; Well Permits ApprovedDeep Water Exp.;
New Well Spuds
Deep Water Dev.;
New Well Spuds
201171155438326
20126717471125932
2013722834575518
2014651652685220
201512115695714
20161027654814
2017133952449
201818413654124
201925317623823
20201016543617
2021181734295
TOTAL38190261676491182
Note: Only includes new wells not sidetrack or bypass boreholes.

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