Knowing the 2019 Offshore Technology Conference in Houston will include a panel discussion called “Coming to Americas” about the many attractive and prolific oil and gas basins offshore North and South America, two conclusions could be drawn:
Somebody’s an Eddie Murphy fan, or the Americas have more potential offshore than most people realize.
OK, it could be Neil Diamond. But that second part is definitely true. With lots of promising prospects, especially off Guyana and Mexico and Brazil, the offshore basins of the Americas continue to roar.
“Coming to Americas” is also the title of a 29-page white paper supplementing the panel session, with details about the realities of operating in offshore-Americas basins. The paper will be available at OTC.
“What makes the Americas attractive? We thought about the attractiveness both in terms of exploration and all the way through to development and production,” said Julie Wilson, research director of global exploration for Wood Mackenzie in Houston.
Wilson will be co-moderator for the panel discussion along with Sandeep Khurana, senior manager for Houston consultancy and engineering company Granherne, a KBR Inc. subsidiary.
“We have painted a picture of what the attributes are,” Khurana said. “What are the challenges and opportunities of coming to Americas? That’s how we framed it.”
The “Americas” session includes a discussion panel featuring a half-dozen high-power experts.
From majors: Erik Oswald, vice president of Americas for ExxonMobil Exploration; Elizabeth Schwarze, vice president of global exploration for Chevron Corp.; and Cindy Yielding, senior vice president of BP.
From independents: Tim Duncan, CEO of Talus Energy, and Chris Golden, senior vice president of Equinor. Plus, a national oil company panelist: Carlos Portela, president of Ecopetrol America.
One surprise might be that the offshore sector of the industry, including deepwater operations, seems to be alive and well. Offshore took a big hit from the oil price decline starting in late 2014, then began to bounce back at the start of last year.
“Some companies have chosen to withdraw from deepwater. I think that shakeout is about over,” Wilson commented.
Then there’s the resilience of production in North and South America – something that extends beyond unconventionals. After all, “in the Americas you’re producing so much you’re exporting,” Khurana said.
Overall sustainability is one focus of attention, with a look at how offshore operators can maintain an economic, ongoing business in the region. Khurana said the topic includes “how to be truly a deepwater player and maintain that, not only entering the basin but participating in the basin supply chain.”
Controlling costs is key for operators. Technology and efficiency are making a difference in offshore-Americas areas known for their productive potential, according to Khurana.
“You can find (hydrocarbons), certainly, in this area. But then how the technology and the supply chain have managed to cut costs makes sure the activity continues,” he said.
“The pace of developments, and how that can happen in the Americas, is because all the technology is in the house here,” he added.
New subsea and facility technologies, improved industry collaboration, geophysical acquisition and imaging advances, increased digitalization and advanced analytics are all playing a part in cost containment, Khurana observed.
“It used to be a big event, the way we processed the seismic. But now it’s pretty quick,” he said.
Offshore geophysics is just one example of a deepwater expense that “either keeps dropping, or it does not inflate again,” he noted. That reality gives offshore operators breathing room as they develop existing plays and extend into new areas in the Americas.
Another targeted topic for discussion will be the role of appropriate fiscal regimes and regulatory frameworks for offshore operations. Given the risks of deepwater drilling, a reasonably attractive – or at least non-deterring – approach is necessary.
In this, also, the Americas have generally been fortunate, Wilson said.
“Countries themselves understand the benefits a thriving oil industry can bring in terms of jobs and wealth and other benefits,” she observed.
“Brazil over a period of time has learned they have to change their fiscal terms to take advantage of these opportunities. And so has Mexico,” she said.
Wilson identified three drivers for the ongoing attractiveness of the offshore basins of the Americas. Together they have:
- Known petroleum systems
- World-class reservoirs
- Diversity of play types
With de-risking from known systems and with world-class reservoirs as “a key to developing at low cost,” the offshore basins of the Americas are drawing attention from around the world, Wilson noted.
Closely Watched Projects
Right now, observers are watching to see just how big the results are from new drilling programs, she said. Some of that will play out in 2019.
“Expectations are that if they are successful, they could be multi-billion-barrel areas. There’s high expectations,” Wilson said.
One closely watched exploration province is offshore Guyana and Suriname, a region where ExxonMobil has found abundant crude production with its Liza-series wells and subsequent drilling in the Stabroek block.
“It’s one of those areas where ExxonMobil had such phenomenal success, the whole industry is watching. We do expect some more discoveries to be made outside the area. It just depends on how big they are,” Wilson said.
Offshore northeast Canada in the Orphan Basin, BP plans to begin a drilling program next year that could involve up to 20 exploration wells. It’s another closely watched area, including the massive structure that came to prominence as the Cape Freels prospect, Wilson noted.
“That is a really, really big structure. The Canadians were kind of showing the industry what they’d mapped out,” she said.
The Mexican section of the Gulf of Mexico is also getting attention, with prospects in both northern and southern blocks made available through bid rounds. And Colombia recently announced exploration plans for a significant block in the Caribbean.
Ecopetrol’s projected Caribbean drilling has garnered interest partly because it targets natural gas reserves, and natural gas is a special case in the Americas.
Commercial production potential for either associated or non-associated gas relies on available markets and transportation infrastructure, Wilson said.
“Gas is one of the things we pick up on as one of the challenges across the basins,” she noted.
“In Guyana there’s no market at all. And that’s a potential challenge for ExxonMobil and its partners. In the Gulf of Mexico it’s easier, but the price of gas is so low because of shale gas,” she said.
Long-cycle, Moderate Investment
Despite all the industry talk about short-cycle development, large companies continue to pursue large, long-cycle offshore prospects. Those projects can lead to substantial reserves and produce for decades, with moderate investment required once they’re up and running.
“For companies with skills in the deepwater, and part of their portfolios already in the deepwater, it really offers a very competitive source of growth for the company,” Wilson observed.
In the end, deepwater operating and management skills make the difference for a company, she said. To be an offshore operator in a sustainable way, a company has to know how to be an effective offshore operator and how to manage those operations.
“Companies can be very, very successful in deepwater,” Wilson said. “But not all companies.”