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Posts Tagged ‘Gulf of America’

“Natural gas and LNG are fast becoming the gravitational center of the global energy system, but some energy experts said the world is only beginning to grasp the scale of what’s to come.” ~Natural Gas Intelligence

Demand and high well producibility are stimulating exploration in the high pressure, high temperature Western Haynesville (Texas) and other ultradeep onshore gas prospects. Is it time to revisit ultradeep gas on the Gulf of America shelf? See the above targets map from 2004.

20 years ago Newfield, Exxon, and McMoRan drilled pioneering ultradeep wells targeting gas-prone reservoirs below salt welds in Miocene and older formations (diagrams below). The water depths were <100 feet but well depths exceeding 30,000 feet, and high temperatures and pressures, pushed the limits of drilling technology at the time. Noteworthy wells:

  • Blackbeard West (Exxon): Spudded in early 2005 in 70 feet of water in South Timbalier Block 168. The target was gas in Miocene sands at 27,000-32,000 feet total depth. Drilling reached 30,067 feet by 2006, but was prudently suspended due to extreme pressures, temperatures (up to 600°F), and technical challenges with equipment.
  • Blackbeard West, part 2: In 2008, McMoRan re-entered the well with upgraded equipment and drilled to a record 32,997 feet below the mudline. They encountered hydrocarbon shows in multiple zones, including potential gas pay in Middle and Deep Miocene sands below 30,000 feet, validating the ultradeep concept.
  • Followup McMorRan wells:
    • Blackbeard East (2010-2011): Drilled to 33,400 feet in South Timbalier Block 144, logged potential hydrocarbons in Sparta and Vicksburg sands.
    • Davy Jones (2009-2010): South Marsh Island Block 230 in 20 feet of water; reached 29,122 feet; discovered gas in Wilcox sands, but faced flow-testing challenges.
    • Lafitte (2011): Eugene Island Block 223, found additional pay in ultradeep Miocene zones. These wells targeted gas reservoirs but encountered operational hurdles.

This program pioneered ultradeep drilling on the shelf, influencing later deepwater successes. Over the past 10 years, the deepwater industry has successfully demonstrated high pressure high temperature (HPHT) technology which could facilitate ultradeep exploration on the shelf.

Also, note that a company targeting hydrocarbons below 25,000 feet (true vertical depth subsurface) may earn an additional 3 years on their lease. (See the Notice for next week’s lease sale.) Will improved technology and demand expectations finally open the ultradeep gas frontier?

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One Big Beautiful Gulf of America

In JPMorgan’s view, the stage is set for a potential decline of as much as 50% in oil prices through the end of 2027, taking Brent crude down to the low $30s per barrel range from its current level of around $63.50.

Will bearish forecasts by JPMorgan and others temper bidding at the highly anticipated, and long awaited, Gulf lease sale to be held on 12/10/2025? Probably not for these reasons:

  • This will be the first lease sale in 2 years.
  • The terms are very attractive.
  • Given the longer term nature of deepwater development, production will not begin for years following lease issuance. Note that anticipated first production for 3 new high-pressure deepwater projects, Kaskida, Sparta, and Tiber, will be 23, 16, and 21 years after the field discovery dates.
  • To the extent that price forecasts are reliable at all (see no. 9 in the image below), the degree of uncertainty for longer term forecasts is particularly high.
  • The sale has to live up to its name Big Beautiful Gulf 1 (BBG1). 😉

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The Gulf oil patch got a pass in 2025! 2026 is anyone’s guess.

As was the case in 2023, there were no tropical storm production shut-ins in the Gulf in 2025. Per the chart below derived from BSEE data, only 4 tropical storms caused platform shut-ins in the past 5 years. This lull followed a 6-storm year in 2020.

The Minerals Management Service Technology Assessment and Research Program began closely studying hurricane damage to offshore facilities following Hurricane Andrew in 1992. Dr. Charles Smith was a leader in these efforts. Attached is a comprehensive study report on Andrew’s effects on offshore platforms. Three background paragraphs are pasted below.

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The press release and full program are linked. It looks like the most recent leaks were accurate. See the maps below with the locations and dates. This will stir the pot!

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Tyler Priest, the leading historian on US offshore oil and gas operations, has published another gem. His book, Offshore Oildom, is a fascinating account of the history of the technologically innovative and economically important, yet highly controversial, OCS Oil and Gas program. His book is highly recommended.

Consider this recommendation by Daniel Yergin:

“Tyler Priest, a preeminent historian of energy and the environment, explores how a single well drilled off a pier near Santa Barbara in 1898 gave rise to a major American industry—offshore oil and gas. In spirited prose, Priest demonstrates how this U.S. industry was created not only by innovation, creative engineering, and complex execution; it was also the result of fierce political battles.” ~Daniel Yergin, Pulitzer Prize–winning author of The Prize: The Epic Quest for Oil, Money, and Power and The New Map: Energy, Climate, and the Clash of Nations

You can learn more here.

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Unsurprisingly, the carbon capture and sequestration (CCS) hype is fading fast. No other carbon strategy is so strongly opposed by both climate change activists and skeptics.

Support for CCS seems to be limited to those seeking to profit from subsidies, mandates, and disposal fees. In 2022, Exxon projected a $4 trillion CCS market by 2050. Pipe dream?

“Highlights” of the Gulf of America OCS carbon disposal era:

Gulf of America lease map: 199 oil and gas leases were wrongfully acquired for carbon disposal purposes. At Sale 261, Repsol acquired 36 nearshore Texas tracts in the Mustang Island and Matagorda Island areas (red blocks at the western end of the map above). Exxon had acquired 163 nearshore Texas tracts (blue in map above) at Sales 257 (94) and 259 (69).

Even those of us who are supporters of responsible offshore oil and gas production find it a bit unsavory that some companies are looking to cash in on (and virtue signal about) carbon collection and disposal at the public’s expense. Perhaps companies that believe oil and gas consumption is harmful to society should be seeking to reduce production rather than engaging in enterprises intended to sustain it.

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NOAA is touting marine aquaculture and has published Programmatic Environmental Impact Statements for Aquaculture Opportunity Areas (AOAs) in the Gulf of America and offshore Southern California. This is a positive step.

While the focus of these EIS documents is on distinct AOAs separated from oil and gas facilities, NOAA might also have discussed the potential for synergy with existing platforms. The reef effect of platforms can be sustained and new fishery ventures supported by converting older platforms to aquaculture facilities (Rigs-to-Roe/Redfish/Rockfish) rather than decommissioning them.

The ecological importance of offshore platforms has been well documented in both the Gulf and Santa Barbara Channel Channel area.

According to a paper published in 2014 by marine ecologist Dr. Jeremy Claisse of Cal Poly Pomona, the oil and gas platforms off the coast of California are the most productive marine habitats per unit area in the world. “Even the least productive platform was more productive than Chesapeake Bay or a coral reef in Moorea,” said Dr. Love. (Milt Love, UCSB biologist)

beneath Platform Gilda, Santa Barbara Channel

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and should be an integral part of Job Safety Analyses!

According to BSEE, there is a recurring trend of equipment misuse contributing to fire and explosion hazards during offshore oil and gas operations in the Gulf of America.

Workers have used tools not rated for electrical work on live circuits (Figure 1) and mismatched hydraulic or pneumatic tools for high-pressure systems (Figure 2). In several cases, non-intrinsically safe hand tools were used in explosive atmospheres, including mudrooms and drilling floors.

The Safety Alert is attached.

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Deepwater Titan, Gulf of America

The latest Baker Hughes Rig Count Report shows only 10 rigs actively drilling in the Gulf. All are at deepwater locations – 7 in the Mississippi Canyon area, 2 in Green Canyon, and 1 in Alaminos Canyon. Per the BSEE borehole file, Shell accounts for most of the current MS Canyon wells and the Alaminous Canyon well. Beacon is also drilling in the MS Canyon, and the Green Canyon well appears to be a Chevron operation.

This current rig count, which has hovered between 9 and 12 all year, is troubling if you are concerned about long-term production. By comparison the Gulf rig count reached 22 last year and was 100+ during the 10 year period from 1994 to 2003.

Only Anadarko/Oxy, Beacon/BOE, BP, Chevron/Hess, Shell, and Talos have spudded deepwater exploratory wells in 2025 YTD. Arena and Cantium are the only shelf drillers – all development wells.

Technological advances and extensions of past discoveries have sustained Gulf production, but declines are certain over the longer term if drilling activity doesn’t increase. Oil price uncertainty is an issue, but that’s always the case. Semiannual lease sales are now legislatively required and the terms will be attractive, so those issues are off the table. Let’s see what the bidding looks like at the upcoming sale.

The decline in deepwater discoveries (BOEM data below) is particularly discouraging. Per BOEM, the last deepwater field discovery was in March 2023.

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