Staged Development Economics And Key Development Factors Is Deep Water Commercially Viable?
Authors: Burton C.D. , Wheeler S.A. , Ruthrauff R.G. 
Published: October 2008

If development of the deepwater Gulf is to proceed, operators must be convinced that technically and commercially viable development options exist. These solutions must be tailored to address the size of the reserve accumulations lying in the relatively deepwaters (3000- 6000 feet) that are typical of the Gulf of Mexico. They must minimize operator's capital risk and maximize his ability to avoid large capital commitments prior to verification of acceptable reservoir performance. The intent of this paper is to discuss methods and parameters that will facilitate deepwater development using staged subsea solutions.

BACKGROUND

In 1968 many were ready to abandon exploration in the North Sea in favor of more promising opportunities in a less hostile environment. Many high cost wells (some estimates exceed 200) had been drilled with no prospects having been identified which justified development, In September of 1968 Phillips drilled into Ekofisk and ushered in the age of North Sea development.

In contrast to the high number of wells drilled in the North Sea without success prior to development, the Gulf of Mexico has seen fewer than 100 wells drilled in deepwater an astonishing number of these have proven up significant reserves. Table 1 provides a partial summary of published data documenting results of what can only be described as a highly successful industry wide exploration program.

In spite of having discovered just under 2 billion barrels of oil equivalent, development of the Gulf has reached a near standstill. Clearly the reason for this lack of development is not an absence of reserves or of reserve potential. Local manufacturing, engineering, and construction capabilities also cannot be faulted. Even with the considerable attrition that has occurred over the past decade, substantial capability exists within the oil community in Texas and Louisiana to support deepwater developments with technology, personnel, and hardware. Why then has development, consistent with the magnitude of opportunity perceived to exist, not moved aggressively forward? The answer would appear to lie in industry's view of the commercial viability of deepwater. Commercial viability not only in terms of reservoir size and production parameters, but faith in industry's ability to successfully implement innovative technology in a cost effective manner in the hostile environment of the deepwater Gulf, Therefore, this paper is intended to focus the reader's attention on a commercially viable development option which exists for the Gulf and to identify those factors which can most dramatically improve a prospect's commercial viability.

Toward this end, the DeepStar project owes its beginnings to Texaco's assessment of deepwater economic issues in late 1991 and early 1992. It was concluded, following a review of Texaco's deepwater inventory, that subsea concepts held the most promise for risk managed, commercial deepwater developments in frontier areas of the Gulf.

Having identified subsea as a promising development vehicle, Texaco began an assessment of what a deepwater system for the Gulf might look like and what production parameters would most favorably impact the system's commercial viability.