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Statoil was the top bidder in a wide-ranging lease sale in the Central Gulf of Mexico. Now the real work begins.
In a spending flurry that netted more than $1.7 billion to the US Department of the Interior, the first Central Gulf Lease Sale since the Macondo incident proved that the industry is ready to return to the deepwater Gulf of Mexico in force.
In total, 593 bids were placed on 454 blocks by 56 companies. Statoil was the top bidder, acquiring 26 blocks, including Mississippi Canyon Block 718 for $157.1 million. The leasing area covered more than 2.4 million acres in water depths ranging from 3 to 3,415 m (10 to 11,200 ft). Deepwater blocks were popular, with 221 bids placed on blocks in water depths of 800 m (2,625 ft) or greater. The Bureau of Ocean Energy Management (BOEM) estimates recoverable hydrocarbons at 800 million to 1.6 billion barrels of oil and 3.3 to 6.6 Tcf.
It will take up to 90 days for the BOEM to review the bids and make the final awards. Once that happens, these companies will have their work cut out for them.
“The industry has had two years to assess the Gulf of Mexico at much greater depth than they did previously,” said Katie Potter, division lead, exploration and production, for NES Global Talent. “The people who have been involved in the lease sale over the past six months have had to time employ the latest technologies and bring in additional talent to make sure their bids were strategic and tactical for what they’re developing in the future.”
Much of that talent has come from the exploration side of the business, as geologists have studied the rock types and structures of the blocks of interest. Potter said that many of the blocks that were bid on are in areas where hydrocarbons already have been discovered, meaning that the bidding companies often are already familiar with the geology.
The level of preparation shows. Potter noted that one company bid $110 million for a block that another company bid $11 million for.
But the real challenge will be staffing up to begin development of these blocks. “Over the next couple of years, as the drilling increases, we’ll start seeing an increase in hiring in deepwater drilling engineers, people who are specifically trained to exploit prospects once they’ve discovered hydrocarbons there,” she said. “It’s likely there will be a talent shortage in deepwater exploration, drilling, and production.”
Already, she said, companies are looking at younger employees with either five to seven years of experience or 10 to 15 years. These employees will be mentored by the seasoned engineers before they retire.
“They want those people in the door now to go through extensive mentoring and training with as many experienced people as possible,” she said. “You’ll see companies developing the mentoring side of their seasoned experts’ job roles.”
With the appraisal work mostly behind them, companies should now be looking at their long-term development plans -- finding rigs, putting drilling contracts in place, etc. “They want to get these prospects working as soon as possible because the shorter the time from prospect to proven reserves, the more money for the company,” Potter said.
Contact the author, Rhonda Duey, at email@example.com.