shelf drilling | Bud's Offshore Energy (BOE)

Posts Tagged ‘shelf drilling’

Deepwater (>1000′) activity continues to dominate, accounting for 61% of the well starts.
Not a single company drilled both shelf and deepwater wells.
While shelf facilities currently account for only about 7% of GoM oil production, 1122 of the 1179 remaining platforms are on the shelf and they account for 24% of GoM gas production, most of which is environmentally favorable nonassociated gas.
Two companies, Arena and Cantium, accounted for 75% of the shelf well starts. Excluding the CCS bids, Arena and Cantium were the most active shelf bidders in Sale 279. Arena bid alone on 7 blocks. Cantium was the high bidder on 5 blocks. (Focus Exploration was high bidder on 4 shelf blocks and was “outbid” by Exxon for High Island 177.)
One company, Shell, accounted for 39% of the deepwater well starts
One of BP’s exploratory wells (drilled subsequent to Sale 257) was in Green Canyon 821, immediately south of GC 777, the block that BP/Talos bid $1.8 million for in Sale 257. That bid was rejected by BOEM. In sale 259, BP was the sole bidder for GC 777, and their bid was only $583,000, less than 1/3 of their Sale 257 bid. Perhaps the GC 821 exploratory well reduced the value of GC 777? Will this lower bid now be accepted?

Gulf of Mexico well starts during 2022 and the first quarter of 2023

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
Year	New Shallow Water Drilling Well Permits Approved	Shallow Water Expl.; New Well Spuds	Shallow Water Dev.; New Well Spuds	New Deep Water Drilling; Well Permits Approved	Deep Water Exp.; New Well Spuds	Deep Water Dev.; New Well Spuds
2011	71	15	54	38	32	6
2012	67	17	47	112	59	32
2013	72	28	34	57	55	18
2014	65	16	52	68	52	20
2015	12	1	15	69	57	14
2016	10	2	7	65	48	14
2017	13	3	9	52	44	9
2018	18	4	13	65	41	24
2019	25	3	17	62	38	23
2020	10	1	6	54	36	17
2021	18	1	7	34	29	5
TOTAL	381	90	261	676	491	182
Note: Only includes new wells not sidetrack or bypass boreholes.