For several months it has appeared that a recovery is underway in the Gulf of Mexico (GoM) and that 2018 was an inflection point for the basin that has endured more resurrections than a cat living out its ninth life. Optimism dared to peek out from behind its curtain of caution as energy forecasters proclaimed 2019 to be a historic one for the GoM.
However, the market winds shifted in December and oil prices fell to below $50/bbl, driving budget makers back to their spreadsheets. Did the price collapse take some wind out of the sails for 2019? Possibly, but that does not mean the year ahead will be any less historic.
“We expect 2019 to be a strong year for the Gulf of Mexico,” said William Turner, senior research analyst at Wood Mackenzie, in a press release. “In addition to exciting new project sanctions, which could usher in more than $10 billion of investment into the region, a couple of historic firsts set to occur next year could set the stage for years to come.”
The first-ever production from a Jurassic-aged reservoir in the GoM will occur when Shell’s Appomattox development in Block 392 of the Mississippi Canyon Protraction Area goes online as planned. The project— featuring the company’s largest floating platform—is considered a cornerstone for Shell’s deepwater global strategy. Average peak production from the Appomattox and Vicksburg fields is estimated to reach about 175,000 boe/d, according to the company.
“If the Jurassic roars to life in 2019, it could give operators greater confidence in the play’s potential,” Turner said. “However, if Appomattox disappoints, the Jurassic could continue to lie dormant. The wider region would also be missing an expected strong production growth contributor.”
Considerable interest surrounds the possible sanctioning by Chevron of its Anchor project in Block 807 of the Green Canyon Protraction Area. With an operating pressure of 20,000 psi, it would be the first ultrahigh-pressure project in the world to reach a final investment decision, according to Wood Mackenzie. Joint industry R&D projects surrounding the design of equipment and systems that can safely produce at 20,000 psi have been underway for more than a decade.
“Anchor will be an important one to watch,” Turner said. “The sanction of Anchor will be a significant milestone for Chevron, Total and Venari, but [it will] also mark a crucial point for the offshore industry as it enters the final frontier in deepwater development.”
Success at Anchor could lead to plans for other Paleogene projects (Tiber and Kaskida come to mind). Wood Mackenzie believes that if Anchor moves forward, more than $10 billion of investment could flow into the region, according to the press release.
With no decision yet on Anchor’s fate, Transocean announced in late December a five-year $830 million drilling contract for one of its newbuild ultradeepwater drillships with Chevron. The drillship is under construction in Singapore and when complete will be the first floater rated for 20,000-psi operations, according to the press release. The ship will feature dual 20,000-psi BOPs, the net hookload capacity of 3 MMlb, a 165-ton active heave compensating crane and an enhanced dynamic positioning system. It is expected to commence operations in the GoM in the second half of 2021. While it is too early to begin playing “Anchors Aweigh,” there’s no harm in getting the band tuned up and ready to perform.