ConocoPhillips has flagged up deepwater as a strategic growth area as the company chases new reserves to hit ambitious future production targets, with the U.S. player underway with an active program to tackle the technology gaps it sees as crucial for overcoming the challenges of producing in such water depths.

With the company having sunk much of its time into establishing a core position in the North American unconventionals sector over the past few years, it is now starting to change its tune as it looks to the long-term. The clearest signal yet came during a presentation at the Offshore Northern Seas (ONS) 2014 event in Stavanger, Norway where John Vicic, manager of the operator’s deepwater technology program, stated simply that “for ultimate growth, we are looking to deepwater”.

Vicic, speaking in a special session focused on the deepwater U.S. Gulf organized by INTSOK, the Norwegian government and industry-backed oil and gas trade organisation, gave a presentation titled "Deepwater Technology Gamechangers." In it, he outlined how ConocoPhillips—which with the spin off in 2012 of its refining operations to Phillips 66 is now fully focused on upstream operations—is focusing both internally and via various industry collaborations on identifying and tackling the key technology challenges.

Last year the company spent heavily to ramp up production, specifically in the U.S., but that was thanks largely to continuing growth in its Lower 48 unconventional assets in the Permian Basin, Eagle Ford and Bakken shale plays. As a result it grew its total production by 7% in its Lower 48 segment last year, including 24% growth in domestic crude oil production.

Vicic, however, said the company believes deepwater holds the key to future production growth. He admitted that in recent years ConocoPhillips has essentially been a non-operating partner in its deepwater U.S. Gulf projects. But, according to Vicic, it is now stepping up its game.

Highlighting the largest oil and gas discoveries made by the industry in recent years, he pointed out that the vast majority had all been made in deepwater where—although the wells are of course expensive to drill—they also required the fewest wells due to their reservoir productivity, especially when compared to unconventional bores.

Faced not only by the extreme water depths but also reservoir pressures ranging from 8,000 psi to 25,000 psi, and temperatures of between 150 F and 375 F, ConocoPhillips has undertaken detailed analysis of the technology gaps.

In the exploration arena he flagged up ongoing efforts to try and “translate” the experience gained offshore Norway with chalk and carbonate reservoirs, and HP/HT fields, to use that knowledge in the Gulf of Mexico. He also highlighted the increased need for ever-more capable AUVs and ROVs to work and monitor in the extreme depths for extended periods of time, mentioning Liquid Robotics’ Wave Glider autonomous unit as an example. Digital oilfield solutions with integrated sensing was also another key area, he said, as well as real-time data centers.

In terms of drilling and completions technology advances, Vicic went on to highlight examples such as a well to be drilled later this year offshore Africa that will see a deepwater drillship carry out managed pressure riserless drilling for the first time.

In the production sector he listed several key issues to be tackled to specifically improve flow assurance, including advances that would be required when dealing with asphaltenes, hydrates, scale and corrosion. Asphaltenes, in particular, were highlighted by Vicic as an aspect of flow assurance that he felt would be crucial to deal with. He also acknowledged the potential for improved subsea boosting and processing solutions, both on the seabed and downhole. “It’s the key—we are working on it by ourselves and also with others,” he said.

Virtually every presentation at ONS this year included ongoing efforts by the industry to control spiralling costs. Vicic was no different, pointing out that goals such as greater standardization are required by operating companies, along with more industry collaboration.

As an example of the latter he highlighted the recently-announced 20K joint development project, to which ConocoPhillips belongs along with BP, Shell and Anadarko, all working with FMC on next-generation standardized subsea production equipment (see DI, 11 August 2014, page 10). “This is looking at everything from the wellhead to the HIPPS (High Integrity Pressure Protection System),” he said. With the program expected to initially cover “about a three-year period”, he said, it is focusing on items including 20,000 psi trees, jumpers, flowlines and HIPPS. “We are also as a company working on 20K drilling systems,” he added.

With an expected 3% to 5% production growth rate for the company in 2014, ConocoPhillips is looking to maintain that rate beyond 2017-2018, and is focused on organically growing its portfolio. That will increasingly see it take more operator positions in deepwater developments than it has done in recent years.

In the U.S. Gulf, Vicic admits that the company is not really a deepwater operator at present (although it is elsewhere), but overall he commented, “We are just coming back into deepwater—I think we’re one of the leaders. We’re the second biggest lease holder in the GoM, and most of that is in deepwater and high temperature leases.”

This was emphasised separately by his boss, CEO Ryan Lance, who spoke at the Barclays CEO Energy Conference. Lance waxed lyrical on the company’s North American unconventionals portfolio such as Eagle Ford, Bakken and Permian, before taking time out to highlight how it is testing out the potential of its deepwater assets in the GoM, Angola, Senegal, Nova Scotia, Norway, Myanmar, Australia’s Browse Basin and Malaysia.

In the latter, for example, it is expecting to be producing more than 60,000 boe/d by 2017 from its deepwater assets, including the Gumusut and KBB developments, which are due to start up in the third and fourth quarters of this year respectively, as well as Siakap North-Petai, which began flowing recently. “This is very high-margin oil production offshore Sabah Island in the deepwater province,” he said.

In the US Gulf it is involved in the appraisal of four major discoveries already, of course. Lance commented: “We are really focused on the Lower Tertiary, the Paleogene where we’ve had four discoveries, Tiber – where we own an interest in that – we will be appraising that this year. Gila, the most recent of the Tertiary-Lower Paleogene discoveries, we have a rig coming there to do some appraisal this year as well. Shenandoah, which was another 2009 discovery pre-Macondo. We have drilled an appraisal well there, found over 305 m (1,000 ft) of net pay. So we are pretty excited about what the upside and opportunity looks at Shenandoah. And then finally Coronado, which was also a discovery a few years ago, and we are on that particular asset right now doing appraisal testing as well. So we are excited about what the deepwater Gulf of Mexico has in store.”

Lance also highlighted what the company is doing across the Atlantic off the west coast of Africa, in the conjugate margin to the sub-salt Santos Basin offshore Brazil. In the frontier Kwanza Basin offshore Angola it has two blocks, 36 and 37, where it is the operator with 50% and 30% stakes, respectively. “You can see they’re offsetting some of the recent discoveries in Angola, which have kind of de-risked the petroleum system, which is good. We are playing that sub-salt carbonate reef buildup play that’s been successful in the Santos Basin on the Brazilian side.”

ConocoPhillips spudded an initial exploration well (Kamoxi-1) in Block 36 during August, and is currently drilling ahead. With a four-well commitment, it will drill two wells in each block. Blocks 36 and 37 are adjacent to Blocks 20 and 21, where the play-opening Orca, Lontra, Mavinga, Cameia and Bicuar discoveries have been made by Cobalt Energy.

A shorter version of this article appears at epmag.com.

Offshore