Conceptual plans for a new deepwater floating production hub in the emerging Paleogene trend of the Gulf of Mexico have been revealed by Chevron, a project that will be welcome news to contractors facing thin pickings over the course of the next year.

The US major gave an unusually clear insight into its intentions when outlining a fresh partnership with BP and ConocoPhillips to explore and appraise a batch of leases in the northwest portion of Keathley Canyon, which Chevron will oversee as operator. Some of the existing High Pressure-High Temperature discoveries in the area have long been eyed as likely developments, but with none having been progressed to an acceptable level of tech­nical and commercial viability on a standalone basis.

However, according to Chevron, its collaboration with the other two majors will see it weigh up the potential of a centralized production facility, with likely fields involved in a joint development to include the Lower Tertiary Tiber and Gila finds, both now being appraised with wells by current operator BP. The latter company will transfer the operatorship of these two fields to Chevron once the appraisal wells are completed.

Chevron also specified that the recent large Guadalupe oil discovery in KC10 could also be in the mix as a potential tie-in to any new central facility.

“The scope of the collaboration between Chevron, BP and ConocoPhillips includes further exploration and appraisal of these GoM leases as well as evaluating the potential of a centralised production facility, which would provide improved capital efficiency, similar to Chevron’s Jack/St. Malo project. Chevron, BP and ConocoPhillips also plan to work together to achieve efficiencies in schedule, realise cost savings, and optimise the use of human resources,” it stated.

The mention of the company’s Jack/St.Malo (JSM) project in Walker Ridge is a strong hint that it may be keen on a similar semisubmersible production facility solution as the central hub, with DI hearing the operator is expected to at least include a ‘copycat’ option for the Keathley Canyon facility, which would help reduce design and engineering costs. JSM was approved in late 2010 with a planned investment of US $7.5 billion in the initial development phase, with first production flowing last December. The facility will eventually ramp up to 94,000 b/d of oil and 21 MMcf/d of gas.

Chevron also, of course, used a deep draft semisub platform in 1,981 m (6,500 ft) of water to develop its Blind Faith field, which began producing in 2008.

However, the water depths concerned mean a dry-tree Extended Tension Leg Platform (TLP) facility should not be discounted – a solution that Chevron already has in its GoM locker. The operator is currently utilising this latter solution in a similar water depth (1,600 m/5,200 ft) on its Big Foot project, due onstream later this year in the Walker Ridge area.

The overall agreement between the three companies covers the exploration and appraisal of 24 jointly held leases in Keathley Canyon. Chevron also specifically flagged up a high-potential prospect called Gibson, which covers six leases in which all three companies hold interests, as a potential component.

Under the agreement, BP is selling to Chevron approx­imately half of its current equity interests in Gila and Tiber. BP, Chevron and ConocoPhillips will also have joint ownership interests in Gibson, where they plan to drill a well later this year. As a result the companies will have the same working interests across Gila and Gibson and any centralised production facility (see interests table, page 12).

Regarding the Chevron-operated Guadalupe discovery (see DI, 27 October 2014, page 6), a find in which it is partnered by BP and Venari, the company stated they would “evaluate this possibility during the upcoming appraisal phase of that discovery”. The field lies in 1,217 m (3,992 ft) of water and was drilled to a depth of 9,197 m (30,173 ft). Chevron holds a 42.5% working interest in Guadalupe, with BP having 42.5% and Venari 15%.

Although no one is expecting the partners to hit the fast-track on this potential project, few doubt that they will not take advantage of the current low-price environment to squeeze down the costs related to the proposed development, with drilling rig, engineering, platform fabrication and subsea infrastructure costs all likely to drop to a significantly lower ceiling in what will be an ultra-competitive bidding climate this year and next.

Referring to the deal in the company’s latest results presentation, Chevron’s CEO, John Watson, talked of taking advantage of opportunities when there’s less competition for assets: “We are actively screening the opportunities that are out there and we will take advantage of opportunities that we see. One that is on the smaller end of the scale… …we did announce a consolidating transaction in the deepwater GoM with a couple of partners, and we think we’ve acquired resource at a competitive cost relative to exploration costs. And there are benefits to all parties from working to develop a common set of assets together in one hub. So we do take a look at the opportunities that are before us.”

In the release concerning the partnership, Jeff Shellebarger, president, Chevron North America E&P, added: “By collaborating across several prospects and discoveries, and incorporating the technologies and experience of the three companies, we expect to develop these fields in the most cost-effective way and shorten the time to final investment decision and first production.”

Chevron currently has five deepwater drillships operating in the GoM, two of which are focused purely on exploration activities.

Richard Morrison, president of BP’s GoM business, said exploring and developing in the Paleogene is expected to remain “a key part of our future in the region. It will allow us to manage and maintain capital discipline by sharing development costs.

He also reiterated that the Paleogene trend is directly relevant to its ongoing HPHT-focused Project 20K initiative – tackling the challenge of operating fields with equipment that can withstand 20,000 psi pressure and 350 degrees Fahrenheit (177 degrees Celsius) temperature – and said it “will work with co-owners to continue this progress”.

BP discovered Tiber in 2009 and Gila in 2013, and is a co-owner in Chevron-operated Guadalupe. Tiber has been continually described since its discovery as being one of the largest finds around, after being drilled to a total depth of 10,685 m (35,055 ft) in a water depth of 1,259 m (4,132 ft). Industry rumours have previously put the oil-in-place figure at up to 3 Bbbl, but that has never been confirmed by BP. Gila is located in KC 93 some 25 miles west of Tiber in nearly 1,524 m (5,000 ft) of water, with the initial discovery well drilled to a total depth of 8,909 m (29,221 ft).