Who Dat. Mississippi Canyon 503 / 504 / 547. Supplement to. Sponsored by

Transcription

1 Who Dat Mississippi Canyon 503 / 504 / 547 Supplement to Sponsored by

2 CONTENTS Who Dat Mississippi Canyon 5 503/504/547 Prospect Plays 14 LLOG president/ CEO Explains Operating Philosophy Deepwater Equipment Choice Crucial for Who Dat 18 Bold decisions bring LLOG, EOC together Building it so they will come 22 Exmar CEO proud that OPTI-EX TM was built on spec Supplement to VP, PennWell Custom Publishing, Roy Markum roym@pennwell.com Managing Editor and Principal Writer F. Jay Schempf fschempf@sbcglobal.net Technical Writers, Jerry Greenberg jerrygreenberg@earthlink.net Richard Cunningham Richard@RCunninghamStudio.com Contributing Photographers Redding Communications, Bob Redding, CEO Bob@reddcomm.com Presentation Editor/Designer, Chad Wimmer chadw@pennwell.com Production Manager, Shirley Gamboa shirleyg@pennwell.com fax: Circulation Manager, Tommie Grigg tommieg@pennwell.com fax: PennWell Petroleum Group 1455 West Loop South, Suite 400 Houston, TX U.S.A fax: PennWell Corporate Headquarters 1421 S. Sheridan Rd., Tulsa, OK P.C. Lauinger, Chairman, Frank T. Lauinger President/CEO, Robert F. Biolchini Sponsored by

3 Drilling at Who Dat Future infill wells to take torturous paths 27 Batch completions keeps drilling rig at work for LLOG 30 OPTI-EX TM Placement signifies a number of firsts 31 Seafloor production layout designed for more expansion Reservoir Engineering at Who Dat Means Constant Gardening 34 Monitoring field data, well performance helps to determine optimum depletion plan Growth Just Ahead for LLOG in the Deepwater Gulf 38 Who Dat, three other new field additions to more than double daily production Company Profiles 40 Company Profile Index 54

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5 Who Dat Mississippi Canyon 503 / 504 / 547 With its truly unique semisubmersible FPS moored in 3,100 ft (945 m) of water now on station in the Gulf of Mexico s Mississippi Canyon (MC) Block 547, the Who Dat field, operated by LLOG Exploration Co. L.L.C. (and affiliate LLOG Exploration Offshore L.L.C.) is awaiting hook-up for first oil and natural gas production to begin sometime in 4th Qtr The field, discovered in December 2007 in adjacent MC Block 503 with Diamond Offshore s 12-column, moored semisubmersible drilling unit, Ocean Victory, was expanded during the next several years to encompass Blocks 504 and 547, as well. And currently, with three wells scheduled to go on stream in the project s first phase, Who Dat has let the offshore industry know in no uncertain terms, well, where it is, what it is, and who has it. LLOG/EXMAR WHO DAT FIELD 5

6 Credit: Mustang Engineering Tugs nudge OPTI-EX TM during preparation for towing the massive platform to its mooring site in Mississippi Canyon Block 547. As to its location, the field rests beneath a wide deepwater area of the Gulf whose Pliocene- Upper Miocene zones had been tested in years gone by but hadn t yielded commercial quantities of hydrocarbons. In fact, all three blocks covering the field had been leased to other, larger companies at one time or another and handed back, undeveloped, to the Minerals Management Service, the Interior Dept. s then official offshore leasing organization. But when the MMS held its OCS Lease Sale No. 194 in March, 2005, LLOG showed up with a whole new take on MC 503. After skillful crafting and molding 3-D seismic records with other geophysical and geologic data, the privately held Covington, LA company posted a $6,770,000 bid for MC 503 considered a relatively high offering at the time for such previously owned acreage. However, the bid out spanned those of seven other companies or partnerships, including several majors and large independents, all of whom had the same access as LLOG to new seismic acquisition records, well logs and improved data processing and modeling software. There, indeed, was more-detailed, amplitude based information. And to LLOG geoscientists, the amplitude anomalies revealed beneath 503 were sufficiently bright to suggest the presence of significant hydrocarbon resources. Stepping softly but lively Though rarely discussed in the general media or trade journals, LLOG is no stranger to the U.S. offshore petroleum industry. Founded in 1977, it began developing onshore Gulf Coast oil and gas reserves, moved into the inland lakes and bays along the coast during the 1980s, and by 1996 had progressed into drilling in federal OCS waters off both Texas and Louisiana. Six years later, in 2002, the company had made its first discovery in water depths of more than 1,000 ft, followed the next year by a discovery in more than 2,500 ft of water, and in 2005 posted its first strike in water depths in excess of 4,000 ft. Since that time, LLOG has become the premier private exploration and production company in the Gulf and one of the top 10 privately owned oil and gas producers in the U.S. Currently it holds interests in more than 147 Gulf leases, of which 80% are undeveloped, and averaged production of 23,000 net boe/day in Also in 2010, the company asserted 2P (proven + probable) reserves of more than 220 million boe (verified by qualified third party consultants). The unit is designed to withstand wind and waves of a 1000-year storm. 6 LLOG/EXMAR WHO DAT FIELD

7 Currently, 84% of LLOG s reserves are located beneath 1,000 ft. of water or more. Developing them will require floating drilling equipment, mainly semisubmersible rigs. Today, some 84% of the company s reserves are located in deepwater (more than 1,000 ft), and its predominant areas of operation are the Mississippi Canyon, Green Canyon, High Island, Main Pass and South Timbalier areas. What s more, the company forecasts production from early 2011 to early 2012 to more than double from fields already discovered. But LLOG s true strength is contained in what it hasn t yet done. With an inventory of nearly 90 exploration prospects, it could more than double its reserves during the next several years. This inventory includes a variety of highquality/low-risk targets, including conventional amplitude-supported prospects in both deepwater and on the Shelf, low-contrast amplitude and sub-salt structural plays in deepwater, and deep gas structural plays on the shelf. No lucky hunch But it was the 2007 MC 503 discovery and later development of the Who Dat field that has brought LLOG into truly big-league competition among leaders in deepwater Gulf E&P operations. Some might attribute a measure of the company s continued success there to plain luck, but like most prosperous companies, management believes the company makes its own luck. Drilling results and well log analysis associated with LLOG s MC-503 wildcat in 2007, coupled with information gathered from competitors LLOG/EXMAR WHO DAT FIELD 7

8 previously drilled wells in MC-546, suggested that the unleased block immediately to the south (MC-547) also held hydrocarbons. Armed with this information, LLOG submitted the winning bid of $23,650,000 for MC-547 in the March 2008 Lease Sale 206. Then, along with a trade with ENI for a portion of MC 504, the company knew it had finally assembled all the necessary pieces for the Who Dat deepwater development. After first referring to the field by the block number involved, LLOG officially named it Who Dat shortly before the New Orleans Saints it s a pretty unique characteristic that our senior managers are also the ones on the ground getting their hands dirty working seismic data. Jay Cole, VP Deepwater Exploration won the NFL s Super Bowl XLIV championship in February The name derives from a local chant used by Saints fans: Who dat? Who dat? Who dat say dey gonna beat dem Saints? However the field name was conjured up, LLOG s staff of geophysicists and geologists are credited with combining their shared deepwater experience with the latest data analysis and modeling tools to delineate the multiple targets within the MC 503, 504 and 547 complex. The company s exploration team, most of whom came with years of both Shelf and deepwater experience with other companies, have taken advantage of both their combined experience in working on major deepwater projects and of LLOG s $ million inventory of 3D seismic data that covers virtually the entire Gulf. The exploration team has generated more than 300 prospects in the Gulf, with nearly a 70% success rate. The seismic advantage Jay Cole, VP deepwater exploration, based in Covington, is enthusiastic about the exploration team, which may be narrow in quantity but doublewide in experience. Being a geophysicist, having access to such a large seismic database and working with experienced seismic interpreters are the things I enjoy most about working for LLOG, he said. We all have our role, and it s a pretty unique characteristic that our senior managers are also the ones on the ground getting their hands dirty working seismic data. 8 LLOG/EXMAR WHO DAT FIELD

9 Production test of gas zone on the first well in MC 503. The collective deepwater experience among LLOG s earth scientists and engineers helps assure that the potential for significant discoveries is established long before the drill bit penetrates productive horizons. LLOG/EXMAR WHO DAT FIELD 9

10 He also emphasized that LLOG s access to high-end, pre-stack time-migrated and depthmigrated 3d seismic data, including wide azimuth type data serves to level the technical playing field with larger companies from an exploration standpoint. We knew MC 503 had been leased in years past by both Shell and British Borneo. It was also public knowledge that several wells had been drilled on adjacent blocks and that hydrocarbons were present, but were declared uneconomic at the time, said John Doughtie, VP exploration Houston. Remember, they recent work by LLOG geoscientists helped us unlock and exploit the previously hidden economic aspect of the 503 area. John Doughtie, VP Exploration - Houston were working the area years ago, before new, more detailed seismic data were available. However, he added, recent geologic and geophysical work by LLOG geoscientists indicated that most of the wells, drilled during the period 1985 to 1998, were not optimally targeted. It was this work that helped us unlock and exploit the previously hidden economic aspect of the 503 area. Geologist Eric Zimmermann agrees. Although LLOG is a relatively small company, many of its technical employees have prior experience at much larger companies. It was fortuitous that when LLOG started out into deepwater, it had a veteran staff overseeing the evaluation of its deepwater assets. From the G&G side, this prior large-company experience allowed us to apply the most current technologies to our seismic data evaluations and has hastened the overall Who Dat Field development. All characterized the team as a compact group that can tackle the same sophisticated data and interpretation software that larger companies deal with, but who can handle it with a lot fewer people and, hence, are able to act much faster valuable assets when preparing for lease sales, making the decision to drill a well and getting the permit to drill it. Putting it forward So, while Who Dat, along with several other, similar prospects, is bringing LLOG into the current spotlight, the company continues to work the 3D seismic data inventory in the 10 LLOG/EXMAR WHO DAT FIELD

11 search for new targets of opportunity. And while both exploration drilling and lease sale moratoria require lead time, post- Macondo, the LLOG exploration team is actively engaged in planning for both to open up soon. We ve submitted several exploration plan applications, and now recognize that both the Industry and BOEMRE (the successor to the now defunct MMS) are engaged in a learning process, said Zimmermann. Clearly, BOEMRE s responsibility and visibility has increased, and that motivates us to be more vigilant, making triple and quadruple checks of our plan and permit applications. It was fortuitous that when LLOG started out into deepwater, it had a veteran staff overseeing the evaluation of its deepwater assets. Eric Zimmermann, LLOG geologist LLOG/EXMAR WHO DAT FIELD 11

12 LLOG EXMAR LLOG uses the latest in seismic processing technology to map productive reservoirs. This slide shows a cross-section of the earth. In this field, seismic bright spots generally indicate productive horizons. A map view of one of the productive horizons is shown. All geologic and engineering data, including seismic properties, well log data, core data, pressure data and fluid data) are used to populate each grid with expected rock and fluid properties. The model represents the collective knowledge of the entire team in all disciplines. 12 LLOG/EXMAR WHO DAT FIELD

13 Being able to visualize the fluid movements in the reservoir over time allows the engineers and geologists to identify areas where oil remains ( unswept areas ), which helps them plan future wells. The model will predict water movement (in light blue) as well as changes in the gas cap. LLOG can compare production from various development scenarios, allowing them to investigate the reserve impact of drilling more wells, changing well locations, changing perforation intervals, and changing production rates. LLOG has run more than 100 sensitivities on the main Who Dat reservoir alone. LLOG/EXMAR WHO DAT FIELD 13

14 Credit: Diamond Offshore Prospect Plays LLOG president/ CEO Explains Operating Philosophy this is one of those rare discoveries where the more we work it, the more we drill it, and the more we test it, the better it gets. The fact that a relatively small offshore operating company could drill a discovery well in the deepwater Gulf of Mexico, develop it progressively over a four-year span and then mount a floating production facility to deliver oil and gas production in less than a year is an enviable record, but to Scott Gutterman, president and CEO of LLOG Exploration Co. the company in question isn t particularly surprised by the feat. Scott Gutterman, CEO, LLOG Yet the Who Dat field, the offshore asset where the aforementioned fast-paced development is taking place, has taken LLOG to a new level of competency, equipping it with the knowhow necessary to take its place among today s leading Gulf of Mexico exploration and production companies, with the exciting promise of even more growth in the near future. 14 LLOG/EXMAR WHO DAT FIELD

15 Gutterman, who joined the company in 1993, has more than 30 years of Gulf Coast onshore, Shelf and deepwater exploration and production experience, chiefly with large independent operating companies. A geologist by profession, he held various jobs in exploration at LLOG before being appointed to his current position in The Who Dat field is by a wide margin the most valuable property we ve ever been involved in, says Gutterman. We ve created quite a bit of value onshore, on the Shelf and in the Deepwater in recent years, but this is one of those rare discoveries where the more we work it, the more we drill it, and the more we test it, the better it gets. It is truly a rare commodity in the Gulf of Mexico exploration and production business. A point of particular pride for Gutterman is that LLOG, a privately owned company, has very little access to public sources of capital, a luxury afforded chiefly to publicly owned companies, large and small. We have tried to stay reasonably liquid over the years and have fueled our growth with our own internally generated resources, he said. For the most part, everything we have done we ve done with our own money. Not that he bewails not having access to public funds. Publicly owned companies, particularly major companies, develop offshore assets on a much broader scope, he noted. Majors buy acreage across larger frontier areas, and if they take on the expense and time to develop a new trend or an extension, and it works, they want to capitalize on that success. So, ahead of new data volumes and before concepts are tested, they capture large amounts of acreage with potential, and if successful, they ve got the expansion room at a much lower cost. It s the intelligent way to do it. LLOG, on the other hand, targets specific prospects, leaving the speculative acreage plays to the larger companies, he said. And while in the past LLOG has resisted the allure of going public, Gutterman doesn t exclude it as a possible way to go in the future. We have reached a point with these deepwater discoveries that one of our biggest challenges will be to determine the most efficient way to fund their development. We have sold pieces of some discoveries to cover our development costs. The farther downstream we can take a discovery, the more we can receive for whatever we incrementally sell, he said. It s a conservative approach, but it has worked for us up to now. He noted that LLOG has held leases full-term, particularly on the Shelf, and has released them without significant exploration. Too, the company has released some deepwater leases, mostly because they were potentially natural gas-prone, and currently the target for deepwater production is crude oil. LLOG/EXMAR WHO DAT FIELD 15

16 The seismic, always the seismic In any case, a rich inventory of 3D seismic data is essential to success for anyone operating in the deepwater Gulf, particularly to a prospect generator, said Gutterman. Calling the Who Dat field a conventional mini-basin amplitude play, LLOG President/ CEO Scott Gutterman says having a rich inventory of 3D seismic data is essential to success for anyone operating in the deepwater Gulf, particularly prospect generators. Who Dat, for example, is a conventional minibasin amplitude play, he said. It shows itself. You can see direct indicators. It s above the salt and it images nicely. The Mississippi Canyon general area was the scene of one of the initial hot deepwater plays in the Gulf. But that was years ago. Today, however, when the industry gets new data, whether it s a new acquisition technique or a new processing algorithm, it typically reveals something that you couldn t see earlier. That s how we developed the MC 503 prospect. LLOG currently has more than a handful of leases in the ultra-deepwater Gulf, and isn t hesitant about exploring them in the future, he said. Processing techniques that allow you to manage velocities are now giving a much better resolution below the salt, he pointed out. The fact that we can image 5-6 miles below the mud line, and do it with accuracy and in some cases, precision, is simply amazing. Scientific data notwithstanding, Gutterman is genuinely concerned about LLOG s roster of experienced exploration, drilling, production and reservoir engineering specialists. Scott Gutterman, CEO, LLOG We re getting a little long in the tooth, he observed. Combined, our people have an average of 30 years experience. At some point soon we will have to address that, but there is some concern that we re not seeing sufficient numbers of graduates in petroleum-related sciences. Taking a realistic view of petroleum industry employment, Gutterman said that from an exploration standpoint, it s not a very glamorous profession to consider these days. 16 LLOG/EXMAR WHO DAT FIELD

17 Net MBOED, Thousands 2P Net Production Forecast PDP PDNP PUD Probable Many of the people who are going into the industry have been exposed to it through family and friends. From an engineering viewpoint, there are a good number of people coming into the industry. But from a geological and geophysical perspective, the candidates are much fewer than they were when I was in School (Gutterman is a graduate in geology from the University of Louisiana Lafayette). But frankly, what we do is fun! he said. Offshore services threatened As for the downturn in the industry spawned by the Macondo disaster, Gutterman is troubled about the effects the permitting slowdown is having on the offshore service industry. If they can t work their equipment they can t exist. We fear that the lack of activity is dismantling the service infrastructure in the Gulf. Some service companies can move their assets to other regions onshore if need be, but marineonly service providers can t re-deploy their equipment domestically. However, the industry is hopeful that the current challenges to gaining access to drilling permits will be met and the process will return to a more timely schedule. Finally, Gutterman is proud of LLOG s close attention to detail in the health, safety and envi- ronmental aspects of Gulf offshore operations. In 2008, the company won the Safe Operations and Accurate Reporting (SOAR) award, granted periodically by the Minerals Revenue Management (MRM) division of BOEMRE to OCS lessees that are outstanding in the areas of offshore operating performance and fiscal responsibility. SOAR recipients must be among the top 10 OCS lessees according to a formula that considers data on Incidents of Noncompliance and accidents attributed to the lessee during the previous calendar year. Also, the award-winner must be among the 10 best-performing OCS lessees in terms of royalty reporting and production reporting during the previous year. There s not a person in this industry who wouldn t want their operation to be as safe as possible, he said. As for the current drilling permit slowdown, we re going to reach a point that permitting procedures are normalized and both operators and regulators will be more efficient. With that understanding, we can then begin planning our business; knowing how to budget for operations. Pre-Macondo, we were spending $400 - $450 million annually in the GOM and Louisiana and today, it s only a fraction of that. We hope to soon get back on a solid basis for planning our operations. LLOG/EXMAR WHO DAT FIELD 17

18 Deepwater Equipment Choice Crucial for Who Dat Bold decisions bring LLOG, EOC together Exmar Marine installed this Vapor Recovery Unit (VPU) as part of the built-in production handling equipment aboard the OPTI-EX TM. The old adage fortune befriends the bold, has been confirmed time and again through the ages. But it couldn t be more apt than when applied to how a privately owned offshore producing company, LLOG Exploration Co. (LLOG), managed to link up with the manufacturer of a unique semisubmersible production platform, Exmar Offshore Co. (EOC) It took boldness on both companies parts to come together to solve mutual challenges, and it worked. LLOG, the aggressive discoverer of the Who Dat field in the Gulf of Mexico in 2007, found itself with a commercial oil and gas asset in Mississippi Canyon blocks 503, 504 and 547, but faced with a dilemma over how best to bring it on stream. The subsea wells were located in fairly deep water (2,600-3,100 ft), so subsea tiebacks to existing platform infrastructure back on the Shelf, which were quite some distance away, might be one solution. It also could produce the field with an 18 LLOG/EXMAR WHO DAT FIELD

19 These oil sales shipping pumps were among equipment built-in to the OPTI-EX TM topsides by Exmar Marine. expensive floating production system of some type, treating liquids and then offloading them into shuttle tankers, with gas production tied back to existing pipelines. Other options included building a new fixed structure on the Shelf and tying it back to Who Dat to gain closer proximity to a transport pipleine back to shore. The costs and construction times associated with a brand-new floating system, be it a spar or other semisubmersible, weren t particularly attractive. Sharing the use of a new floater with another company also was discussed, but that, too, was expensive and would limit LLOG s use of its topsides facilities. Too, purchasing an existing system originally designed and built for another field would place severe limitations on what could be done with it at Who Dat, particularly since topsides facility modification would have to be carried out offshore a serious problem in itself. Also problematic with all these options was that lengthy negotiations with other companies to settle fees for treating and carrying LLOG oil and gas, and capacity limitations of existing pipelines in the area, most definitely would pose additional delays. But LLOG management would have to decide quickly in order to bring production on stream to begin offsetting the investment already made in acquiring the leases and drilling and completing the wells necessary for full field development. The company already had made other discoveries in deepwater, and had developed them mainly with subsea tiebacks, but the reserve size involved at Who Dat was the company s first encounter with the probable need for floating production equipment. And this time it was warranted. Enter the FPU Meanwhile, EOC, part of the Europe-based Exmar LNG/LPG shipbuilding and tanker services group, was engaged in building floating production facilities for deepwater fields around the world. This included construction of floating production, storage and offloading (FPSO) vessels and the design of both drilling and production equipment. A particularly attractive market was the deepwater Gulf, where all sorts of floating systems were in demand. But EOC had a trump card to play in the competition for deepwater equipment the deep-draft OPTI-EX TM semisubmersible production platform, boasting a unique hull designed to improve motion performance and a flexible, generic, single-deck topsides designed to accept modular skids specific to a user s needs. It also featured direct drive of main equipment. Combined, these design features alone would allow for rapid deployment and, perhaps more importantly, re-deployment for early production and marginal field applications the first such independently owned floating production unit (FPU) with such redeployment capabilities. LLOG/EXMAR WHO DAT FIELD 19

20 Exmar s speculatively built floating production unit, the OPTI-EX TM, was the optimum size for LLOG s needs at Who Dat. The two companies made their deal, and the FPS was on station in the field in less than a year. Eager to place a full-size example in front of the industry, EOC got the go-ahead in 2006 from the parent company to actually build an OPTI- EX TM, convinced it would be scooped up almost immediately for use in the deepwater Gulf. So, EOC ordered the hull to be built by Samsung Heavy Industries in Korea and the flexible topsides to be designed by Mustang Engineering in the U.S. Exmar elected to build the topsides at Kiewit Offshore Services shipyard in Ingleside, TX, where it would be mated with the hull, which was to be dry towed from Korea. The actual mating took place in May The topsides were complete other than field specific requirements, primarily production and export metering equipment. The decision to build on speculation was indeed a bold one, considering the vagaries of the market for first-time equipment designs of any kind. But EOC was sure that once potential users witnessed the versatility designed into the OPTI-EX TM with their own eyes, they would lease it for use in deepwater fields, particularly those with shorter life spans. And once used to drain such a field, EOC could then move the FPU back to shore for refurbishment and made ready for new equipment skids and another deployment. A chance encounter Back at LLOG, as company managers tell it, several months of meetings were held 2009 and early 2010 to address LLOG s options for floating equipment to aid in development at Who Dat. At one such meeting, one of the company s engineers mentioned having picked up a onepage brochure on EOC s OPTI-EX TM platform. To that point, equipment like the OPTI-EX TM had not been considered. But it looked attractive, particularly since it was already built and there were indications that it could be fitted with topside skids designed for a specific offshore field. Some of us went down to Ingleside and kicked the tires a bit around the OPTI-EX TM, said Bruce Cooley, LLOG VP of Facilities, who also is project manager for the company s subsea and pipeline activities. It was built out except for the ins and outs. The name plate said it was equipped to handle 60,000 b/d of liquids and 50 mmcf/d of gas. They hadn t installed the measurement system or the LACT (lease automatic custody transfer) and gas sales skids, among other equipment, so we thought we could make it work for us. Negotiations began between LLOG and Exmar in April 2010, based initially on a lease arrangement and later on, an outright purchase of 20 LLOG/EXMAR WHO DAT FIELD

21 OPTI-EX TM is equiped with an extra large flare tower. the FPU by LLOG. The companies agreed on the latter arrangement and in August 2010 an acquisition contract was signed, with payments scheduled to be made in different milestones over a period of 62 months after installation in the field. The total outlay by LLOG for the FPU would be more than $400 million. Once the sales agreement had been reached, LLOG ordered a high-pressure inlet production module that incorporated what it needed for primary separation. It didn t have the gas dehydration capacity that we needed, so we added a new contactor system that was good for up to 150 mmcf/d, said Cooley. The as-built liquid-handling capacity (60,000 b/d) worked for us. Construction of the Who Dat-related skids was begun in August 2010, and the OPTI-EX TM was towed to its pre-set location in MC 547 in July The schedule was a big advantage for us, said Cooley. We got the FPU on location in less than a year, with first oil to begin in late September-early October. Any of the other options would have taken much longer, he added. Some of us went down to Ingleside and kicked the tires a bit around the OPTI-EX TM, we thought we could make it work for us. Call it serendipity or just plain luck, but it took audacity on the part of EOC to build the OPTI- EX TM on spec. And it took daring on LLOG s part to accept an untested FPU to develop one of its most important deepwater assets. Bruce Cooley, VP Facilities, LLOG But as the old saying goes, fortune does befriend the bold. LLOG/EXMAR WHO DAT FIELD 21

22 Building it so they will come Exmar CEO proud that OPTI-EX TM was built on spec because of the EOC team s determined focus and attention to detail from the start, the integration sequence was even smoother than we expected. Nicolas Saverys, chairman and CEO of the diversified Exmar shipping and offshore group headquartered in Antwerp, Belgium, believes that designing floating production equipment that is shipyard friendly allows for overall lower use of steel and more precise assembly of components. Also, by a simplified design of single-level topsides deck space, attracts more interest by potential customers, since they can add production and storage equipment modules to fit their particular offshore field requirements. Nicolas Saverys, Exmar Group CEO Saverys is proud of the design team at the group s Houston-based Exmar Offshore Co. (EOC) business unit and their series of deepwater semisubmersible offshore platform designs, suitable for production, as well as for drilling and well intervention applications. The Exmar Group is set up as a fully integrated shipping company that not only operates vessels commercially, but also builds, finances 22 LLOG/EXMAR WHO DAT FIELD

23 Integration of the OPTI-EX TM topsides with the hull took less than 3 hours. and manages vessels and platforms technically. The EOC unit not only designs and builds such equipment, but can lease, bareboat charter, time charter, and enter lease-and-operation agreements, as well as sell its equipment. But Saverys is especially pleased that EOC led the call for speculative construction of the company s OPTI-EX TM design floating production unit (FPU), which only a year and a half or so after construction was sold for more than $400 million to LLOG Exploration Co. for the Who Dat field. The OPTI-EX TM is the first speculative semisubmersible FPU in offshore petroleum industry history. As built, the OPTI-EX TM was designed to fill the needs of producers with medium to large fields in water depths up to 10,000 ft., which takes in a majority of currently planned production facilities in the Gulf of Mexico. It also would qualify for similar-sized fields off West Africa and eastern South America, among other areas with similar water depths and weather conditions. Credit: Mustang Engineering The devil s in the changes Typically, the design and construction of major floating production units is often burdened by major and minor design modifications, not to mention myriad alterations during construction brought on by changes in field requirements. But over-design is THE problem in building offshore production units, said Saverys, noting that the Exmar Group has a distinguished past as both a ship designer and builder, and since the 1980s has been a leading supplier of highcapacity LNG and LPG ships as well as floating production, storage and offloading (FPSO) vessels, which lends valuable experience to its engineering staff. He added that when offshore producers, particularly major companies, oversee the design and construction of large deepwater production installations, field requirements change, affecting the original design, often months or years into the process. What s more, he said, different departments and changing project management personnel often precipitates additional changes, once again affecting the original design, even during construction. Such changes inevitably add physical weight to the finished product. Added weight, in turn, generates still more changes, including even major fabrication restructuring. LLOG/EXMAR WHO DAT FIELD 23

24 And, he said, When you start changing the design, it often perplexes the shipyard, he said. They will obviously make the changes, but there will always be a price tag attached. As CEO of the Exmar Group, Nicolas Saverys believes more units like the OPTI-EX TM will be used in the Gulf of Mexico deepwater market Perhaps even in the near future. Exmar s design for the OPTI-EX TM, he pointed out, is purposely generic, making the FPU versatile, since the producer the lessee or the owner has the leeway to install his own production handling and storage equipment skids. Added spare capacity makes it even easier to do so, he added. The design of the OPTI-EX deep draft ringpontoon hull is based on improved motion responses for a wide range of extreme sea-states. These motion characteristics allowed the unit to be installed in one of the most onerous areas in the Gulf of Mexico. The ring pontoon and large ballast capacity also allow for the easy installation of a large number of production and export risers without the need for any internal hull modification. The ring pontoon acts very much like a foil, similar to how, say, Boeing would design the wing of a new aircraft concept. The single deck, he said, is designed to match the top dimensions of the hull which, in the case of the existing OPTI-EX TM, measures about 200 ft X 200 ft (over 3500 square meters). This allows for maximum space to hold various sizes of process equipment, storage and quarters modules, which are added later by the user. The large overhead cranes allow easy access to each module and skid on the deck. Smooth integration The initial design assumed a quayside integration of hull and topsides to avoid the risks and costs associated with an offshore integration, which often is necessary with float-out production facilities, said Saverys. It also allowed the topsides to be fully pre-commissioned on land. So, besides having designed OPTI-EX TM, the EOC team s second big achievement was matching the hull, fabricated at the Samsung yard in South Korea, with the topsides, fabricated in the U.S., he said. 24 LLOG/EXMAR WHO DAT FIELD

25 The sequence of integrating the OPRI-EX topsides with its hull was even smoother than even Exmar expected. These two large pieces of equipment had to match, which such equipment often does not under similar circumstances, said Saverys. It isn t unusual to have to burn a bit of steel or weld additional pieces on the spot, but because of the EOC team s determined focus and attention to detail from the start, the integration sequence was even smoother than we expected. The integration plan called for a period of up to three days for mating the topsides to the hull, he said. But once the topsides were positioned above the hull with the aid of the heavy-lift crane at the yard, it took less than three hours two hours and 35 minutes, to be exact. A coming trend? Saverys said the OPTI-EX TM is unique in many ways, but won t remain so. We already have received interest in not only a straight repeat of the unit sold to LLOG, but also for bigger versions with more deck load capacity. One prospective customer wants to more than double the production-handling capacity to120,000 boe/d or higher, he said. Although Exmar will eventually no longer own the OPTI-EX TM, Saverys expects LLOG would redeploy it when Who Dat field development is complete and the reserves are fully depleted, or when a larger FPU might be necessary. Of course, that s LLOG s decision to make, he said. But by owning the equipment, they also increase the value of their field assets. A relatively quick refurbishment, addition of different process and storage equipment, and they could conceivably move it to a whole new area. He said EOC is engaged in studies to determine where, in an intelligent way, similar approaches might work outside the Gulf. There s been a very open relationship between Exmar and LLOG s teams, he said. Exmar is a relatively small company in the industry, and so is LLOG, at least for now. So our mutual goals match to some degree. That helped in the decision process. Each team knew things the other one didn t and each had experience that was valuable to the other. That resulted in a smooth level of cooperation. We had an agreement in principle in less than two months from our first discussion, for example. And once we began, everything fell into place, thanks to focus everyone involved had to have to make this a success. LLOG/EXMAR WHO DAT FIELD 25

26 26 LLOG/EXMAR WHO DAT FIELD Courtesy: Noble

27 Drilling at Who Dat Future infill wells to take torturous paths The Who Dat field lies beneath an average water depth of 3,200 ft, with ten stacked reservoirs located between 10,000-17,000 ft (3,048-5,182m) in Pliocene and Upper Miocene Age zones. The field would appear rather simple to develop from the standpoint of drilling and completions, but such is not necessarily the case, since several future development wells will be drilled with rather torturous directional bores. The discovery well, drilled in 2007, confirmed the presence of mainly natural gas and condensate reserves in the MC 503 prospect. Diamond Offshore s Ocean Victory drilled the well. Two years later, after LLOG leased MC 547 just to the south, the company used the Noble Lorris Bouzigard semisubmersible drilling two delineation wells a second well in MC 503 and a single well in the newly acquired block. The company later replaced the rig with the Noble Amos Runner, which is equipped with higher pressure blowout prevention equipment and is also better-suited for completion work. LLOG/EXMAR WHO DAT FIELD 27

28 The Noble Amos Runner semisubmersible was used to complete two wells in the Who Dat field. Combined, the three Who Dat wells penetrated seven of the field s ten horizons. The second and third wells were completed in mainly oil zones, testing from 17 to 26 API crude with gas/oil ratios (GOR) ranging from 400 to 1,300. Crude properties contain low wax content and no asphaltene flocculation. Reservoir pressures range from 6,000 to 12,500 psi, and flow tests delivered an average of up to 10,000 b/d of oil and 60 mmcf/d of nonassociated gas. All three wells drilled and completed thus far apparently weren t all that difficult, if you ask Bob McMann, and Steve Stegeman, LLOG drilling engineers who directed drilling operations at Who Dat and at a number of other LLOG deepwater blocks in the same general area. The company plans to drill up to nine additional wells to fully develop Who Dat, they observed. However, with the exploration drilling shutdown following BP s fatal Macondo blowout and spill in early 2010, coupled with the subsequent long delays by BOEMRE in issuing new exploration drilling permits, it may still be some time before they are drilled. In any case, they said, recent installation of the OPTI-EX TM FPU in the field, along with subsea production infrastructure being put in place to serve it, has made further Who Dat drilling a moot point until the existing wells go on stream, which is expected this fall. Lots of drilling ahead We do have a number of infill wells to drill, said McMann, In fact; the very next one will penetrate six or seven targets, and will prove up a lot of reserves. A new drilling rig will have to be found to drill the wells, they explained, since the company s three-year contract for the Noble Amos Runner recently reached its term. We probably have more than 700 rig days in the drilling and completions mode at Who Dat alone, said Stegeman. And we ve scheduled more than 700 rig days of exploration 28 LLOG/EXMAR WHO DAT FIELD

29 Courtesy: Noble drilling elsewhere. Also, there s a tremendous shortage of deepwater rigs in the Gulf these days, so we re actively looking for drilling equipment, even though none of our exploration permit applications have been approved by BOEMRE. LLOG s drilling record and number of wells drilled is an admirable one, particularly for a privately owned company (see related chart below), the two engineers pointed out. Most of the top companies working both on the Shelf and in deepwater have big drilling departments, said McMann, and that includes both large and small independents. We have a very experienced staff of Engineers, which includes Steve Stegeman, Mike Kaberlein, myself, our consultants and field drilling supervisors. We feel fortunate that we have this high qualified staff. 900 neers to make certain the company s offshore projects come about as smoothly as possible. The drilling engineers and geologists worked closely together to allow all targets to be reached from two drill centers. Stegeman said most of the wells planned have azimuthal changes in addition to inclination changes of more than 30 to 60 degrees and in two or three dimensions (3-D complex wells). That being said, we are confident we can successfully execute this drilling program because we have previously drilled more complex wells. And there are some potential horizontal wells ahead, which is unusual in this current play, he said. But we re confident we ll be ready to drill them. Top 20 GOM Drillers Number OCS wells Drilled by Operator TD from 1/1/2002 through 12/31/2010 Future challenges Just prior to the Macondo mishap, LLOG had one floating rig with two jackups, Mc- Mann noted, adding that as drilling engineers, he and Stegeman often work closely with both completion and reservoir engi- Number wells Apache/Mariner Chevron Stone Anadarko/KMG ERT Shell W & T BP ExxonMobil/XTO Source: BOEMRE Database, LLOG Drilling Records LLOG Number 1 Private LLOG Number 12 Overall Arena Energy XXI LLOG Energy Partners Walter Nexen Eni McMoRan Dynamic GOM Shelf ATP LLOG/EXMAR WHO DAT FIELD 29

30 Batch completions keeps drilling rig at work for LLOG If it weren t for conducting completion work on deepwater wells throughout most of 2010, LLOG might today find itself quite behind in development of several of its prospects, including the Who Dat field itself. The problem was that the company was planning to drill a number of exploratory wells in several deepwater prospects, and was planning a fourth well at Who Dat, when the federal government declared its moratorium on deepwater drilling activity after the fatal Macondo disaster and spill in April The six-month moratorium, put in force in May, was officially lifted the following October. However, new regulations put forth by a brand-new Department of the Interior kept a tight lid on the process of approving deepwater drilling permits, a situation that remains to this day. Like many other deepwater producers in the Gulf, LLOG has not yet gained a single permit approval in the 10 months since the moratorium was lifted. But while some deepwater producers elected to void drilling contracts early on by declaring force majeure, LLOG managed to keep its one deepwater semi-submersible rig on contract, the Noble Amos Runner, completing the exploratory wells drilled before Macondo in the vicinity of Who Dat. According to Barney Paternostro, LLOG completions engineer, the company normally prefers to drill exploratory and development wells in batches to minimize rig costs, and then batchcomplete them at a later time. So everyone was familiar with what the post-macondo situation dictated, during which the company conducted seven completions before having to release the rig at the end of its contract this past July. The three subsea completions conducted in the Who Dat field were very complex. Two of the wells are equipped with Baker Hughes intelligent well system which enables the selective production of multiple zones without future subsea well intervention. Perforating and installing frac packs are fairly conventional for subsea wells, but adding the installation of subsea trees and the intelligent well system, along with flow-testing the wells back to the rig, all add to the complexity, said Paternostro. Fortunately, he said, LLOG was in the midst of a multi-year alliance with FMC Technologies for the supply of subsea tree systems for various LLOG projects, including the Who Dat field. These subsea trees typically have a long lead time of over twelve months for delivery but were already equipped and ready for subsea installation. So this allowed the company to start the successive well completions very quickly. One of the deepwater horizontal trees supplied by FMC Technologies for one of the Who Dat field wells meets the air-water interface prior to installation on the sea floor. 30 LLOG/EXMAR WHO DAT FIELD

31 OPTI-EXTM Placement signifies a number of firsts Seafloor production layout designed for more expansion In mid-july, when the OPTI-EXTM floating production system (FPS) was attached to its mooring system in 3,100 ft of water in the southeast quarter of Mississippi Canyon Block 547, service vessels and barges began bearing down on the area to complete the process of hooking up the FPS s topsides production handling facilities with the seafloor production hardware in preparation for first oil and gas from the Who Dat field. With little or no downtime after arriving at the site, the FPS was successfully moored and made ready for taking on production, scheduled for fourth quarter The OPTI-EX TM floating production system, along with its mooring system, now installed in Mississippi Canyon Block 547, is designed to withstand the wind and wave forces of a 1,000-year storm. According to Scott Gutterman, LLOG Exploration Co. (LLOG) president and CEO, the placement of the OPTI-EX TM was a significant milestone, since it was the first deepwater FPS to be installed in the Gulf of Mexico after the Macondo incident. Also significant, said Gutterman, was that it was the first time the U.S. Coast Guard has approved an existing FPS for installation. LLOG/EXMAR WHO DAT FIELD 31

32 Installed in the Gulf during the early part of the summer storm season, the OPTI-EX TM awaits connection with the Who Dat field s subfloor infrastructure. The OPTI-EX TM also is thought to be the first privately owned FPS in the world. Rugged mooring system The FPS is held on station with 12 chain-polyester-chain mooring lines connected to preset 80-ft. suction pile anchors. Both FPS and mooring system are designed to withstand the wind and wave effects of a 1,000-year storm. Two subsea wells in MC 503 and third in MC 547 denote the production kickoff for LLOG s overall development plan for Who Dat, which currently is based on an eventual total of 12 wells. Designed by Pinnacle Engineering, the Who Dat seafloor layout features two well centers A and E in Block 503, both about 12 miles away from the FPS, with dual 6-in.D insulated flow lines connecting each well center to the FPS. The flow lines are round-trip piggable. Each of the centers services existing FMC horizontal subsea trees, installed earlier with the assistance of equipment aboard anchorhandling vessels (AHV). They are serviced via jumpers to multi-well manifolds, also designed and fabricated by FMC. At the E center, two 4-slot manifolds are connected in series to allow for up to eight wells. A single 4-slot manifold serves the A center. The wells in each center are connected to the flow lines back to the FPS and controlled via two subsea control umbilicals to each drill center with electrical and hydraulic flying leads to every well, each independent from the other, giving LLOG the capability of continuing production in the event flow from one center is interrupted or choked back for any reason. The MPS Vessel Olympic Intervention IV, owned by Oceaneering International Inc., is equipped with two work class ROVs rated for 4,920-9,840 ft (2,500-3,000m) water depths. It is scheduled to make subsea connections. 32 LLOG/EXMAR WHO DAT FIELD

33 Each of the Who Dat seafloor well centers is linked to the OPTI-EX TM FPS by control umbilical. Here, the umbilical is seen being reeled before being taken offshore for subsea installation. All well center flow lines, as well as both oil and gas export pipelines, are connected by flexible risers to the FPU. Special adaptors were fabricated to connect the risers to specific points on the outside surface of the FPS lower pontoon. This modification was accomplished as the OPTI-EX TM lay afloat at the Kiewit yard using a special coffer dam to expose dry welding points. from Shell production facilities as well as from those owned by other producers in the Mississippi Canyon and adjacent areas. For gas export, the FPS is connected via a 9.5- in. flexible riser to a 17-mile, 10-in. pipeline to a PLET connecting to the Independence Trail pipeline operated by Enterprise Field Services, L.L.C. Export line tie-ins A 5,000-ft., 11.5-in. flexible riser from the FPU will connect to a 19-mile, 14-in. heavy wall thick oil export pipeline culminating at a pipeline end terminal (PLET) that ties into Mars pipeline system, which gathers processed crude LLOG/EXMAR WHO DAT FIELD 33