Gulf of Mexico deepwater production is bypassing ship-shape producers.
Two events occurred recently in the Gulf of Mexico, both explaining and portending deepwater development trends for the area. First was the announcement that BP's Crazy Horse field may be even larger than thought. A further discovery at Crazy Horse and a new discovery at Crazy Horse North confirm the field's billion-barrel-plus potential - unconfirmed estimates have run as high as 3 billion bbl for the Crazy Horse, Mad Dog and Holstein complex.
The second event was the release by the US Minerals Management Service (MMS) of the final Environmental Impact Statement (EIS) for use of floating production, storage and offloading vessels (FPSOs) in the Gulf of Mexico. That the two occurred almost simultaneously speaks volumes. Crazy Horse was once thought by industry pundits to be a good candidate for FPSO development. It will be developed by one, or possibly two, large semisubmersible production facilities of the 250,000-b/d variety. On the other hand, FPSOs were predicted to have a bright future in the Gulf of Mexico, clouded only by environmental and regulatory issues. With the release of the EIS, most wider environmental and regulatory issues are mooted - FPSOs now face only site and development-specific approval, just like any other facility. But although the outcome of the EIS has been known for some time, no FPSOs are working in or obviously planning for the Gulf of Mexico. So what happened?
What happened was really a number of things that rolled into one factor - FPSOs are too late for all but the most esoteric applications in the Gulf of Mexico. While industry wrestled with the EIS conundrum, alternative technology was developed to supplant FPSOs in the Gulf of Mexico.
There is nothing wrong with FPSO technology. To the contrary, some 80 FPSOs produce, safely and efficiently, oil in offshore areas around the world, except for the Gulf of Mexico. Their environmental record has been excellent. Their mobility and adaptability has driven down remote, harsh-environment and deepwater field development costs. They would have been excellent development tools for the Gulf of Mexico. Some may still find application there, but not in the numbers imagined even 2 years ago.
Basically, FPSOs should have been a viable option for field development in the Gulf of Mexico several years ago. But until the advent of deepwater development, the area had the world's most well developed offshore infrastructure - there was simply no need for FPSOs, especially as the area became more gas-prone. As deepwater development cranked up, there were some obvious candidates for FPSO development, but by then, the threat of an environmental outcry - real or imagined - stymied operators and the MMS. In the final analysis, any opposition that may have been raised to FPSO deployment in the Gulf of Mexico would have been politically motivated (the "No Exxon Valdez on my watch" mentality). The environmentalists were notably absent in the EIS hearings. By the time the hand wringing and subsequent EIS process was finished, sophisticated tension-leg platform (TLP), mini-TLP, spar and semi technology had become the development options of choice for the Gulf of Mexico.
Nothing was lost in the process. No important fields were left undeveloped for lack of technology. Indeed, viable new technology was developed. Only the independent FPSO operators and builders suffered, and at that it was only a missed opportunity.
But a point should be raised here. The industry chose to fight bureaucracy with bureaucracy. In hindsight, it probably was not the right choice. If one operator or a group of operating partners had stepped forward with a site-specific FPSO development request, the issue would have been settled early, and there might be FPSOs in the Gulf of Mexico today.
As it is, new technology is providing a deepwater infrastructure to tie-in further deepwater developments in more remote areas, further diminishing the need for FPSOs. And the issue was never quite this simple. Questions about the application of the Jones Act that dictates American crews on American hulls for point-to-point US shipping may hamper any shuttle fleet development. And requirements to recover all reinjected gas will burden field economics for deepwater FPSO field developments without an expensive gas export line.
Still, one wonders if we could fly over a couple of nice, fat operating FPSOs in the Gulf of Mexico if a different tack had been taken.
Coping with tragedy
It would be remiss not to mention the tragedy that befell the Petrobras 36 (P-36) Roncador production facility in March (See "Explosions sink Petrobras semisubmersible," p. 130). The explosions that shook the giant semisubmersible had claimed 10 lives as of our press date. Our condolences go out to all involved.
Like the rest of the world, we watched in horrified fascination the efforts to save P-36. It looked like they almost made it, until, that is, Mother Nature caught up with them. For most of us here, the awful news brought replays of Piper Alpha. That is how we react to tragedies - by comparing them to others. There is the worst air disaster in history, the worst defeat in history, the worst storm in history. While these comparisons are only natural, they often gloss over major achievements. Despite the tragedy, there were triumphs in the disaster. First, many more could have been killed. Modern technology protects our workforce better than ever. And the semisubmersible's design and construction was sound enough to prevent immediate sinking, allowing time for evacuation. Second, an environmental disaster was averted for the most part when subsea wells shut in properly. Although subsurface safety valves are not new, operating them in more than 6,000 ft (1,830 m) of water is.
But there is more. Working on the edge - pushing the boundaries - has always been associated with risk. P-36 was producing hydrocarbons from waters deeper than anyone had ever attempted before. Ten years ago, that would not have happened either. That Petrobras has led the way into deep water is, in itself, admirable.
No one, least of all Petrobras, has ever wanted an accident like this. Such events take a tremendous toll on people and progress. NASA barely recovered from the loss of the shuttle Challenger - there was talk of terminating the entire US space program. To NASA's credit, the shuttle program continues, better and safer than ever. So will deepwater projects around the world.