Researchers Say Ultra-Deepwater Gulf Production Necessary

With the natural gas industry in the United States having to shoulder the ever-increasing burden of gas-fired power generation, development of the ultra-deepwater Gulf of Mexico needs to be pursued in addition to other options such as LNG and Alaskan production, according to a new study led by Roger Anderson, director of Energy Research at Columbia University.

The study noted that the U.S. will be "hard pressed" to build the large number of LNG terminals that provide the only significant alternative to North American supply increases. The current gas production scenario needs a large quantity of new gas to be introduced to the market to offset the natural exponential decline in known gas production from within the borders of the United States.

The team of researchers included Columbia's Albert Boulanger, senior staff associate at the Lamont-Doherty Earth Observatory; Texas A&M University's James Longbottom, director of Ultra-Deepwater Research Initiative at the Texas Engineering Experiment Station; and University of Houston's Ronald Oligney, director of Engineering Research Development and adjunct professor at the Cullen College of Engineering.

"We must explore, discover, appraise, develop, and exploit the vast new gas reserves discovered in waters deeper than 1,500 meters in the ultra-deepwater Gulf of Mexico if we are to have any hope of meeting this demand increase," the researchers said in the study. "In addition, we must deliver to market new gas from deep and tight reservoirs on land, coalbed methane and Alaska or we may have to ration gas between heating and power, particularly in the Northeast. No one wants to be responsible for such a choice."

More gas must be discovered each year than the year before to replace the country's declining supply. The study acknowledged Energy Information Agency (EIA) estimates, which find the U.S. will need more than 8 Tcf of newly discovered natural gas to supply demand by 2013.

In order to plug this ever-widening gap, the research team said candidates for increased supply are the Alaskan North Slope, deep continental gas, coalbed methane, Canadian imports and the ultra-deepwater Gulf of Mexico. By 2020, the researchers expect the country will need gas from all of these sources to supply demand. The study noted that imports have steadily been increasing since 1985, and may exceed 20% of consumption in 2003.

However, nothing is going to come easy, as each of the prospects face technical economic and policy problems that "must be solved" before increased development can begin, the team said.

Focusing on the ultra-deepwater Gulf, the team said getting to the deep underwater gas will require significant new research and development. "We know the gas is there, but the petroleum industry does not know how to economically produce it to market," the team said. "A new paradigm is required."

Outlining the merit of ultra-deepwater development, the researchers said gas and oil discoveries in the ultra-deepwater from throughout the world have already exceeded 45 billion boe, with 30% of that gas. According to Minerals Management Service estimates, the potential of the ultra-deepwater in the U.S. Gulf range up to about 30 billion boe, with fully one quarter of this projected to be natural gas and gas liquids.

Conscious of the fact that recent oil and gas discoveries including Thunder Horse and Mad Dog have demonstrated the potential of the ultra-deepwater in the Gulf, the team warned that the production capabilities of the ultra-deepwater reservoirs in water depths from greater than 1,500 meters to more than 3,000 meters "remains largely a mystery at this time, particularly for gas."

In addition, new methods and devices will be required to produce the reserves economically, necessitating a cooperative effort between government, industry and academia. One of the hurdles viable production is faced with is ultra-deepwater temperatures, which are below the freezing temperature of methane, so any sea-floor pipelines, manifolds and wet trees must mix "anti-freeze" into the gas to keep it from forming gas hydrates, which can plug the pipes, the study noted. "Completely new discovery, appraisal, design, construction, production, operational and environmental technologies must be developed before that gas can be delivered to market."

The economy of such a project is currently bleak. The study found that the Activation Index for the Gulf of Mexico ultra-deepwater is estimated to be greater than $9,000/boe/d, compared to $3,500/boe/d in Venezuela and Saudi Arabia, $2,000/boe/d for the world average, and $1,000/boe/d for the shallower shelf of the Gulf of Mexico.

Looking for a good place to start toward answers, the study identified a Department of Energy-developed Offshore Technology Roadmap, which outlines the research and development needed to produce from the ultra-deepwater (http://www.fe.doe.gov/oil_gas/reports/ostr/roadmap.html).

The researchers said "Major new technologies must be invented and integrated into systemwide efficiency increases incorporating:

  1. High Intensity Lean Design;
  2. Accelerated Reservoir Exploitation;
  3. New Drilling, Completion and Intervention Technologies;
  4. Enhanced Ability to Transfer Energy to Markets; and
  5. Environmental Stewardship.

"On the good news side, the ultra-deepwater foldbelts that extend from the deep basin of the Gulf of Mexico up and under the Sigsbee salt sheet of the continental margin contain what the oil industry calls a significant new play concept," the team said. "Production from limestone or carbonate reservoirs might extend northward from the prolific Campeche Basin of offshore Mexico and the Golden Lane near Tampico, to the Mexican Ridges and as far north as offshore Texas and Louisiana, then east to Alabama and Florida, and maybe even looping all the way back around to the south and Cuba."

The ultra-deepwater foldbelts in U.S. waters are comprised of large, northeast-southwest trending "compressional anticlines," the study showed, listing volume potential as tremendous, with dozens of such anticlines providing 1-2 billion boe reserve potential each. The researchers said the largest anticline in the Perdido foldbelt -- located off the southeast tip of Texas -- covers an area the size of Washington, DC and contains "over 4,000 meters of potential reservoir thickness."

Looking ahead, Anderson said "that new ultra-deepwater technologies will dot the landscape of the U.S. Gulf of Mexico in the future only if technological developments like those identified by the DOE roadmap produce the required paradigm shift toward a more efficient, integrated systems approach prevalent in aerospace and automotive industries today. It is not enough to simply import modern production technologies from oil provinces of deepwater Brazil and West Africa. New methods will have to be invented and adapted to the ultra-deepwater Gulf of Mexico if we are to successfully produce large gas volumes."

The team said the "Lego block" modularity prevalent in the aerospace and automotive industries has hardly penetrated the upstream energy industry.

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