Upstream Intelligence Brief, March 26 - April 8, 2015

Exxon Mobil Corporation has announced that production has begun at the Hadrian South field in the deepwater US GoM, while FMC Technologies and Techinp signed an agreement to launch Forsys Subsea. The GoM oil and gas Lease Sale 235 was in line with expectations, attracting $538,780,056 in high bids for tracts offshore Alabama, Louisiana and Mississippi.

Credit: landbysea

ExxonMobil begins production at Hadrian South

On March 30, ExxonMobil Corporation announced that production has begun at Hadrian South, in the deepwater US GoM, with facilities tied back to the Lucius truss spar, operated by Anadarko. Gross daily production is expected to reach approximately 300 MMcf/d of gas and 3,000 b/d of liquids, while net daily production from Hadrian South and Lucius will total more than 45,000 boe. ExxonMobil has a 46.7 % interest in Hadrian South and a 23.3 % interest in Lucius. Hadrian South, situated approximately 230 miles offshore in the Keathley Canyon at a depth of about 7,650 feet, is operated by ExxonMobilPetrobras holds a 23.3% interest and Eni holds a 30% interest.

FMC Technologies and Techinp launch Forsys Subsea

FMC Technologies and Techinp signed an agreement to launch Forsys Subsea, a 50/50 joint venture company. According to the two companies, the alliance will decrease the costs of subsea field development and offer technologies to maximize well performance. Forsys Subsea will attempt to face subsea equipment costs by decreasing the interfaces of subsea umbilical, riser and flowline systems (SURF) and subsea production and processing systems (SPS). Subsea equipment represents the second highest cost for deep-water wells after drilling. Headquartered in London, upon launch Forsys Subsea will rely on a workforce of 320 people. Rasmus Sunde (FMC Technologies) will be the new company’s CEO and Alain Marion (Technip) its Chief Technology Officer (CTO).

Shell keeps on using Helix Energy’s Q4000 vessel

Constructed for well intervention in up to 10,000 feet water depths, Helix Energy's Q4000 is a DP3 semi-submersible vessel, used by Shell in the US GoM since 2011. The vessel is used for subsea completion, coiled tubing deployment and decommissioning. The contract has been extended until the end of 2017.

Murphy encountered a dry hole

The Urca well, in the GoM’s Mississippi Canyon Block 697, did not find significant reserves of hydrocarbons. Murphy's dry hole expense for Urca will amount to approximately $47 million in the first quarter of 2015.

Lease Sale 235 in line with expectations

The oil and gas lease sale for the Central Gulf of Mexico held by the Department of the Interior’s Bureau of Ocean Energy Management (BOEM) on March 18 attracted $538,780,056 in high bids for tracts offshore Alabama, Louisiana and Mississippi. Overall, 195 bids were submitted by 42 companies on 169 tracts of the U.S. Outer Continental Shelf. The total sum of the bids amounted to $583,201,520, less than the March 2014 $850.8 million bid. The program offered more than 60 million acres for development, awarded 877 leases and attained $2.4 billion in bid revenues. Shell’s bids amounted to 17, Statoil to 14, Venari to 12, and Chevron and ExxonMobil each had 11 bids. The largest single bid, amounting to $52.2 million, was offered by Houston Energy and Red Willow Offshore for Walker Ridge block 107. In total, deepwater attracted almost 60 % of the bids, as 100 of the 169 tracts that received bids were deeper than 2,624 feet. Lease Sale 246, which will concern the Western Gulf of Mexico Planning Area, is scheduled to take place in New Orleans in August of 2015.

Surge in US oil production

According to the EIA, US crude oil production grew by 16.2% in 2014, reaching 8.7 MMbbl/d. The increase, which amounts to 1.2 MMbbl/d, is the largest since 1900, when record keeping began. It is mainly due to the extraction of oil from shale formations in North Dakota, Texas and New Mexico.
 

    
 

Small impact of oil prices on the GoM production

According to EIA, low oil prices will have a “minimal direct impact” on the production of crude oil in the GoM through 2016. Production is expected to reach 1.52 MMbbl/d in 2015 and 1.61 MMbbl/d in 2016, equaling respectively 16% and 17% of the total amount of US crude oil production.