Gulf of Mexico Offshore Oil Production

8/13/2019 Gulf of Mexico Offshore Oil Production

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Offshore

Production

GOM Facts : Over 50,000 wells drilled in

GOM,

7,000 active leases,

About 3600 structures 64% of leases are in Deep Water

(>1000 ft).

Nearly 4,000 wells drilled indepths > 1000 ft

700 wells in all Federal water5,000 ft and greater

Gulf of Mexico (GOM) provides97% of Federal OCS Production.

Source: Dept. of Interior, May 27, 2010, Increased Measures for Energy Development on the Outer Continental Shelf,


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History of Drilling the Gulf of Mexico

1937 First Fixed Platform 1 mile out: Pure Oil

1947 - 18 miles out: Kerr McGee & Superior

the Kerr-McGee field produced >50 years

1966 first subsea well, Sinclairs Eugene Island 175

1979 F rst eep water >1000 t S e s Cognac F e

2003 first well drilled in 10,000 ft of water Chevron)

2004 first producing field at 7500ft of water depth Shell

2006 MMS estimates GOM contains 45 billion barrels of

undiscovered technically recoverable oil and 3.9b proved. 2009 second highest year for oil production.

Sources: 2003 AAPG Explorer and

2004 Deep Water Where the Energy Is MMS Publication


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GOM Production

In 2009, GOM production accounted for 31%

of total domestic oil production and 11% of

total domestic natural gas production.

highest annual production for the Gulf of

Mexico OCS.



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2006 NOAA Map of 3858 Oil and Gas

Platforms in the Gulf of Mexico

There have been over 50,000 wells drilled in the Gulf of Mexico. About

27,000 wells have been plugged and abandoned under DOI Regulations.


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Gulf of Mexico OCS Active Leases


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Offshore Production Facilities

Wikipedia


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3,500,000

4,000,000

4,500,000

5,000,000

4,900,000

Barrels of Oil Spilled

Spill Volumes 1960 to 2010

What is Typical?

Deep

Water

Era

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000, ,

1960-69 1970-79 1980-89 1990-99 2000-09 Macondo

est.

99,000 106,000 7,000 2,000 18,000



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4,000,000,000

5,000,000,000

6,000,000,000

3,455,000,000 3,387,000,000

4,051,000,000

5,450,000,000

Production

Spilled

Production vs. Spill Volumes

Barrels of OilDeep Water Era

0

1,000,000,000

2,000,000,000

3,000,000,000

1960-69 1970-79 1980-89 1990-99 2000-09 Macondo

est

1,460,000,000

0

99,000 106,000 7,000 2,000 18,000 4,900,000



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OCS Blowout Events > 1,000 bbls

1964-1970

After these blowouts, in the period from 1971 through 2009, a total of approximately1,800 barrels was spilled on the Federal OCS as a result of blowout events. Of that

amount, 425 barrels were blowouts resulting from hurricane damage. An additional 450

barrels occurred at an oil pump during production operations. Since 1956, 15 blowouts

resulted in at least one fatality; three of these events occurred after 1986.Source: Dept. of Interior, May 27, 2010, Increased Measures for Energy Development on the Outer Continental Shelf,


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Blowouts what type?

Blowouts represent a type of loss of well control event that canresult in large discharges of oil into the natural environment.

Since 1970, the number of blowouts per number of wells drilled hasvaried significantly from year to year.

From 1964 through 1970, a total of approximately 178,000 barrelsof oil was spilled on the Federal OCS as a result of blowout eventssee a e . About 13,000 barrels resulted from blowouts related to external

forces, such as hurricanes and ship collisions.

An additional 30,000 barrels were released when a production fireresulted in the loss of well control of 12 wells on a productionplatform.

The remaining 135,000 barrels that were released during blowoutsoccurred during drilling, well completion, or workover operations.



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Deep Water Statistics

Nearly 4,000 wells have been drilled in gulf water depth inexcess of 1,000 feet and 700 wells in all federal water 5,000feet or greater;

80 % of offshore oil production and 45 percent of naturalgas production came from DW in 2009;

2001.

Economic Impact In 2009, federal offshore leasing revenue was $6 billion.

All U.S. offshore operations provide direct employmentestimated at 150,000 jobs.

Since 1953, the federal government has collected $200 billionfrom lease bonuses, fees and royalty payments from all offshoreoperators.



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Offshore Spills and Blowouts

From 1964 to 2009, 17.5 billion barrels of crude oil andcondensate have been produced in federal offshore waters,while 532,000 barrels have been spilled; meaning 30.3barrels have spilled per 1 million barrels produced;

The number of spills jumped during the 2000-2009 decade

jumped to 18,000 barrels from 2,000 barrels in the 1990s.

Seven offshore blowouts occurred in federal waters from1964 to 1970 that resulted in spills exceeding 1,000 barrels.Since 1971, blowout events have resulted in only 1,800barrels of spilled oil.



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Historical Spills?

Very Small Prior to April 2010 The last major incident resulting in oil coming ashore

from a blowout in the US OCS occurred 41 years ago, in1969. From 1970 until April 2010, a total of 1,800barrels of oil spilled due to blowouts. Allmeasurements of safety have shown a steady level of

Service regulations came into effect in 1970.

The safety record in the Gulf of Mexico for offshoreworkers is much better than that of the average workerin the US, and the amount of oil spilled is significantly

less than that of commercial shipping or petroleumtankers.

Source: Society of Petroleum Engineers,

SPE Notes, July 6, 2010


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Historical US GOM Spills?

Very Small Prior to April 2010 The last major incident resulting in oil coming ashore from a blowout in

the US OCS occurred 41 years ago, in 1969. From 1970 until April 2010, atotal of 1,800 barrels of oil spilled due to blowouts. All measurements ofsafety have shown a steady level of improvement since modern MMSregulations came into effect in 1970. (SPE Notes, July 6, 2010)

The GOM safety record for offshore workers is much better than that ofthe average worker in the US, and the amount of oil spilled from wells has

een signi icant y ess t an t at o commercia s ipping or petro eumtankers. (SPE Notes, July 6, 2010)

Over the past 45 years (to end 2009), 17.5 billion barrels of crude oil andcondensate have been produced in US federal offshore waters, while532,000 barrels have been spilled, meaning 30.3 barrels have spilled per 1million barrels produced (US DOI Statistics, May 27, 2010 report & Reuters, June 4, 2010).

Natural Seeps, during the same 45 year time period, flowed an estimated

50 million barrels of oil into US waters from natural subsea seeps (most inGOM and Southern California) (Source: Oil in the Seas III)

SPE Notes can be found atwww.spe.org

Oil in the Seas III, National Research Council of the National Academies), 2003


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Why So Slow?

The very low rate of spills from wells in theGulf caught everyone off guard.

The Macondo accident is unprecedented,and comprehensive studies of methodsfor more rapid and effective responses to apotential deepwater blowout are being

. A rapid response effort has been proposed

and funded by industry.

The offshore industry has learned fromthis incident and is making changes inoperating practices, training andequipment to ensure that we are betterprepared to handle a subsea flow from afailed blowout preventer and riser. (SPE Notes,July 6, 2010)


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What Changes Are Needed

Safety can be increased quickly with theimplementation of safety recommendations made bythe US Department of Interior, including verifyingcompliance with existing regulations and a NationalSafety Alert, recertification of all BOP equipment, and

. Additional safety requirements have been proposed for

implementation within one year, including taking afresh look at how to deal with a deepwater blowout.

Other changes may be recommended after the

accident investigation is completed, and the rootcauses of the blowout are determined.




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Basis of the Moratorium

While the rate of blowouts per well drilled has

not increased, even as more activity has

moved into deeper water, the experience with

challenges in containing a blowout in

deepwater, as compared to containing a

blowout in shallower water.



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What is the Impact of the

Moratorium?

The moratorium provides time for DOI to ensure new procedures are inplace to make operations safer. DOI organized a group of expertreviewers and contributors who agreed to a list of recommendations tomake drilling safer. Some of these recommendations take time to studyand adopt into regulations to assure compliance. In some cases the timeframes may be as long as 6 months and even longer in one or two cases.

However, a drilling moratorium can itself create additional safety risks. Forcing existing drilling operations to stop as soon as possible without

finishing the drilling of wells. Discontinuous operations can increase risk.

It is possible that the best rigs could leave the GOM first and come back last,creating a negative impact on the overall quality of the fleet.

Ceasing operations for six months and longer could lead to a loss ofexperienced drilling staff. Staff experience is a key factor in safe operations.

More crude oil would have to be imported by tanker and the risk of spills

during tanker transport is greater than from drilling.




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Is Deepwater Production That Important?

In 2009, production from US OCS accounted for 31 % of total domestic oilproduction and 11 percent of total domestic, marketed natural gas production.

Deepwater development is a key component of the USs energy supply, with 80percent of US OCS offshore oil production and 45 percent of US OCS natural gasproduction in water depths greater than 1,000 feet.

The deepwater GOM supplied approximately 25 percent of the USs domestic oil

.producing blocks in the GOM are located in deepwater.

While drilling at depths of 5,000 feet or more was almost unheard-of 20 years ago,about 6 percent of world oil production now comes from deepwater wells,according to research from IHS Cambridge Energy Research Associations (CERA) onThe Role of Deepwater Production in Global Oil Supply. Offshore oil is expectedto make up some 40 percent of world production at the end of this decade.

Globally, 14,000 deepwater wells have been drilled. In 2008, the total amount ofoil and natural gas discovered in deep water globally exceeded the volume foundonshore and in shallow water combined, according to CERA.

Source: Society of Petroleum Engineers, SPE Notes, July 6, 2010


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What About the Remaining Oil?

Damage estimates vary widely from World

Ending Scenario to moderate.

Cleanup will take time.

Rea Time In ormation Is Avai a e:What can be learned from previous spills?

What can be learned from the thousands of

natural oil seeps?


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Natural Oil Seeps in

the Sea

How much is there?

Where did it come from?

What will it do?

What is the effect long

term?

Can it be totally stopped?

Geology.com


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How Much Oil is There?

Data to 2003

76,000,000 gallons (1.8 million barrels) enterNorth American waters every year and380,000,000 gallons (9 million barrels) enterthe worlds waters every year.

Four Sources:

Natural Seeps

Petroleum Extraction

Petroleum Transportation

Petroleum Consumption

Data from: Oil in the Sea III, Committee on Oil in the Sea, National Research Council of the

National Academies, The National Academic Press, Washington DC, 2003.


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North America

Natural Seeps 62% - 47,000,000 gal/yr

Principally, GOM, California, Alaska, Canada

Petroleum Extraction 1% - 880,000 gal/yr (to 2009)

T is is NOT trivia since it is o ten re ease in mass

Petroleum Transport 4% - 2,700,000 gal/yr

Again, not trivial

Petroleum Consumption 33% - 25,000,000 gal/yrCars, boats, parking lots, roads, roofs




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Natural Seeps

Natural seepage from geologic formations below the seafloor to theseas off North America exceeds 47,000,000 gallons each year andworldwide 180,000,000 gallons each year.

Natural seeps therefore flow over 60% of the oil into the seas inNorth America and 45% of the oil worldwide.

In North America, the largest and best known seeps appear to be

restr cte to t e u o ex co an t e waters o out ernCalifornia. These regions also have extensive oil and gas production.

Many of these oil seeps were known (and used by nativeAmericans) since the 17th century.

Areas around seeps are extremely important laboratories forunderstanding crude oil behavior in the environment as well as how

marine life responds to the introduction of petroleum.




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Extra Slides

Who inspects what?


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Review of Application for Permit to Drill (APD)

DOI conducts an engineering review of the APD. Checks: proposed drilling rigs maximum operating limits for drilling depth and water depth proposed procedure, including assessment of best available and safest technology

well location and directional program,

geological and geophysical hazards,

subsurface environment for pore pressure and fracture gradient,

wellbore design and schematic,

design calculations for pressure containment during drilling and completion,

cement volumes, and testing pressures for the well control equipment, casing and casing

. hurricane risk assessment is performed during hurricane season.

how the proposed operation satisfies regulations in meeting its objective of safely reaching atarget depth. Including an assessment of:

well casing setting depths determined by formation strength, predicted formation fluid pressure,drilling mud weight limits, any anticipated subsurface hazards;

effectiveness of well casing strength for pressure containment at its specified depth;

effectiveness of cementing the well casing after successfully securing and isolating the hydrocarbonzones or any encountered subsurface hazards; and

maintaining well control by adjusting drilling mud properties and the use of well control equipment

such as diverters and BOPs.

Upon completing the engineering review, the Department may approve the APD

with conditions if warranted, return it to the operator for modifications, or deny it. If

the applicant makes changes to the drilling application, the Department must grant

approval before the applicant performs its work.



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DOI MMS Rig Inspections

The Department maintains a comprehensive inspectionprogram to promote the safety of offshore oil and gasoperations on the OCS.

This program places inspectors offshore on drilling rigs andproduction platforms to enforce operator compliance with

. When a drilling rig enters Federal waters to drill a well,

Federal inspectors will meet the rig where it is moored toprovide training to the rig operators about the Federalregulatory structure. At this time, inspectors will conduct adrilling inspection of the equipment.

It is Departmental policy for inspectors to inspect the rigonce on location every 30 days.



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Inspections - Platforms

For production platforms, it is practice for initial

inspections to take place during the fabrication of

the platform at a shipyard.

diagrams and charts to determine if the specific

facility meets regulatory requirements.

A complete production inspection of the facility

occurs typically about 30 to 45 days after aproduction platform is installed.



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Inspections - Producing Platforms

After operations begin, the Department conductsadditional announced and unannounced inspections.

Inspectors typically give the operator a few days notice forannounced inspections.

Inspectors also fly to platforms or rigs unannounced, and in

,approach the facility.

These unannounced inspections foster a climate of safeoperations, maintain an inspector presence, and allowregulators to focus on operators with a poor performancerecord.

They are also conducted after a critical safety feature haspreviously been found defective during previousinspections or by operator reporting.



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Inspections - Drilling

1. a general safety walk through of the facility looking for general housekeeping hazards related toslips/trips/falls/railings/open gratings;

2. verification of the location of gas detectors/hydrogen sulfide detectors/mud volume detectors;

3. verification that the mud trip tank is operational and properly marked (graduated),that appropriate quantities of a mudweighting material are onboard (barite), and that the drilling mud currently in use has been periodically tested and is of theproper density as indicated in the APD (viewing mud loggers report);

4. verification that proper well control data relative to the well depth and type of tubulars (drill pipe, casing) in the well isclearly marked and posted on the rig floor and that there are remote BOP and Diverter control panels on the facility;

5. verification that equipment is properly grounded and that drill string safety valves with proper wrenches for the diameter ofdrill pipe or casing currently in the well are located on the drill floor in an open position and within easy access to rigpersonnel;

6. verification that the crown block safety device is installed and operational and that fresh air intakes are properly located on

t e rig;7. verification that diesel engines have required shut down devices, that breathingair is properly labeled, that engine exhaust

is insulated;

8. verification that crane load charts on platform rigs have been recorded, that all equipmenthas proper catchbasins/drains/curbs/gutters/drip pans, that the facility is properly marked as to location, that the facility is properly lighted;

9. if drilling is being conducted on a production facility, verification that there is an operational Emergency Shut Down deviceon the rig floor;

10. verification of the status/switch position of the BOP pumps that the stand-by pump operates in an automatic fashion, thatthe accumulator bottles are in service;

11. review the BOP tests records;

12. checks the Subpart O well control status of contractor and lessee employees;

13. checks for certain Potential Incidents of Noncompliance, which allow the inspector to check for general competency relatedto drilling operations; and

14. inspectors may test, randomly or as a result of a safety concern, an offshore employees competency with various safetydevices.



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Inspections - PINC

DOI maintains a National Potential Incident ofNoncompliance (PINC) List to help inspectors carry outenforcement actions: it contains a checklist ofrequirements for specific installations or procedures andprescribed enforcement actions consisting of writtenwarnin s shut-in of a com onent includin wellsequipment, or pipelines, or shut-in of an entire platform.

When noncompliance with the National PINC is detectedand if the violation does not impose an immediate dangerto personnel or equipment, a warning Incident ofNoncompliance (INC) is issued.

An INC must be corrected within 14 days from the timespecified on the INC, and the operator may not continuethe activity in question until it has corrected the INC.


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DOI Funded

Studies on Deep

Water

Source: Dept. of Interior, May 27, 2010, Increased Measures for

Energy Development on the Outer Continental Shelf,

Gulf of Mexico Offshore Oil Production

Documents

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