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The Deepwater Horizon oil spill has thrown up a tricky conundrum for deepwater exploration and production. The environmental damage caused by the explosion, coupled with the difficulty of sealing the leaking well at such huge depths, has given governments and the public a profound distrust of deepwater projects.

Nevertheless, the world’s economy is driven by oil, and companies are now targeting wells previously thought to be inaccessible. As a result, a new wave of offshore projects is going ahead in waters far deeper than the ill-fated Macondo Prospect.

The push to deepwater is a global trend. In September, specialised deepwater drill-ships began to arrive off the coast of Malaysia as Petronas and contractor Transocean work to harness the country’s deepwater resources, which, it has been estimated, will comprise up to 40% of the country’s oil production in 10 year’s time, compared to the 4% it represents today. In May, Chevron Canada began drilling on the Lona 0-55 prospect in the North Atlantic, which will set a new record for Canada’s deepest well at a depth of 2,600m.

But in spite of the Macondo spill, the Gulf of Mexico remains the key hub for ultra-deepwater development. We take a look at a particularly successful offshore project currently gearing up in the gulf, and examine the challenges that make deepwater development such a risky venture.

“In spite of the Macondo spill, the Gulf of Mexico remains the key hub for ultra-deepwater development.”

Perdido platform, Gulf of Mexico

On March 31 this year, Shell announced first oil on its most complex and challenging offshore platform to date – Perdido, a direct vertical access (DVA) spar platform moored in around 2,450m of water in the Gulf of Mexico.

With a peak production estimate of 100,000 barrels of oil equivalent per day, Perdido is the world’s deepest oil platform.

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The spar will act as a hub for developing three separate fields in a 15km radius – Great White, Tobago and Silvertip – and dozens of wells, and Perdido will be the first platform to achieve commercial production from the gulf’s Lower Tertiary reservoirs.

Shell, Perdido’s operator (Chevron and BP are the other stakeholders in the project, with a 37.5% and 27.5% stake respectively), made use of a host of innovative technologies to drill wells at such depths. The two drilling decks on board the Noble Clyde Boudreaux, Perdido is able to simultaneously work on two separate wells, with operators guiding the drill-bits using remote controls to access reservoirs up to two miles beneath the seabed.

A major challenge involved with drilling at these depths is that the fields are usually found in considerably more remote locations. Perdido, which lies more than 200 miles from the shoreline, is no exception.

This presented Shell with the problem of transporting oil and gas back to shore. Shell’s engineers more than halved the distance required for pipeline infrastructure by connecting to existing pipes used to transport oil and gas from other fields in the gulf.

Using subsea ROVs, separate oil and gas pipelines were laid to the nearest existing infrastructure. Here, oil flow in the existing pipelines was halted while ROVs flushed them out and removed an 8.6m section of pipe in order to put into place a new connection point. “We achieved this record-breaking feat without spilling a drop of oil,” notes Shell’s subsea pipeline installation manager Don Nelson. In April, the National Ocean Industries Association awarded Shell its 2010 Safety in Seas Award for its “outstanding contribution to the safety of life offshore for energy workers in the design and execution of the Perdido project”.

The challenges of deepwater

While the industry is holding up Perdido’s progress as a triumph for smooth ultra-deepwater development, other projects in the Gulf of Mexico emphasise the technical, logistic and regulatory challenges that face companies trying to tap into the region’s deepest reserves.

BP, the operator of the Deepwater Horizon, is suffering further scrutiny in the Gulf of Mexico, highlighting the more proactive regulatory stance embodied by the US’ recently established Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) and the sharper attention of the public.

“Using subsea ROVs, separate oil and gas pipelines were laid to the nearest existing infrastructure.”

In the wake of the Macondo oil spill, a BP insider leaked information concerning deep safety flaws on one of BP’s other ultra-deepwater platforms, the Atlantis, which operates in 2,150m of water 190 miles off the coast from New Orleans.

This information, released by former BP contractor Kenneth Abbott, alleges that the company failed to have engineers verify essential design and engineering plans, making them potentially unreliable and unsafe.

Although BP categorically denies that Atlantis infringes on deepwater regulations, BOEMRE is in the (much-delayed) process of investigating the platform, and non-government watchdog Food & Water Watch is suing the company to get production at the platform suspended as soon as possible.

It is a potent example of the fact that one of the main challenges for deepwater operators is to constantly scrutinise safety measures, as failing to do so can be as devastating to production as any technical hurdle.

Another issue that can be particularly problematic for deepwater projects is the remote offshore locations at which they are often built and the severity of weather conditions. The development of BP’s Thunder Horse platform, the company’s largest offshore semi-submersible, was struck a blow in 2005 when Hurricane Dennis ripped through the region, causing the platform to list nearly 30 degrees in the water.

The hurricane and following safety improvements delayed production on Thunder Horse from the initial start period of late 2005 until the summer of 2008. The most significant task for the post-hurricane repairs were cracks in the subsea manifold that could have potentially led to a disastrous deepwater spill. Gordon A. Aker Jr., who was the senior design consultant on Thunder Horse, told The New York Times this summer, “It could have been catastrophic. You would have lost a lot of oil a mile down before you would have even known.”

“In the wake of the Macondo oil spill, a BP insider leaked information concerning safety flaws on one of BP’s platforms.”

With the risks of deepwater development and the newly strengthened regulations, it is perhaps unsurprising that some companies are moving forward cautiously.

Mexico’s state-owned oil and gas company Pemex announced in August that its ambitious plan to perform exploratory drilling at the Maximino well, at depths of more than 2,600m, has been postponed until April 2011 because of concerns about the complexity of ultra-deepwater development.

The deepwater drill-ship that should arrive in Mexico in November will first be used to drill the simpler, shallower Tulipau-1 field, which lies in just 700m of water.

“The decision to start drilling at Tulipau is mainly to allow the technical team to familiarise themselves with the platform’s technology before moving to the more complex site at Maximino,” according to a Pemex statement issued in August.

Even with the complexities of deepwater drilling, the industry’s ambitions to commercialise deeper wells remains unabated. In order for this development to go smoothly, the standards for safety must rise to meet the new deepwater technologies being pioneered. In the Perdido project and the Deepwater Horizon we have seen examples of both solid success and tragic failure in this sector, and ambition must be tempered with responsibility if we are to see none of the latter in the future.