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The offshore oil and gas sector is beginning to recover 2 years after oil prices bottomed out, which has led to cautious optimism in the sector. At this year's Offshore Technology Conference, held 30 April–3 May in Houston, that feeling was evident, although there is still a strong emphasis on cost containment and efficiency. This year was the 50th OTC, which has become a bellwether for the health of the offshore industry. Panel sessions, individual talks, and technical sessions focused on a range of topics, including the current state of the industry, reducing costs, breakthrough technologies in a low-oil-price environment, and the growing use of data analytics and digital technologies. More than 61,300 attendees from more than 100 countries gathered at the annual conference. Below are selected highlights from the conference.
Recent years have seen a burst of activity in the Guyana-Suriname Basin, as several major offshore discoveries have sparked industry interest in a nascent area that could have a significant amount of untapped reserves off the northern shores of South America. A panel discussion the 2018 Offshore Technology Conference (OTC) examined the state of business development in the area, and representatives from owner and operator companies discussed the prospects of commercial opportunities that the basin may contain. Bob Fryklund, chief upstream strategist at IHS Energy, said the Guyana and Surinam basin is a potentially booming area. The Stabroek block, located in the basin, has been a boon for operator ExxonMobil and co-owners Hess and CNOOC Nexen since 2015, with seven major discoveries (Liza, Liza Deep, Payara, Snoek, Turbot, Ranger, and Pacora) in the block uncovering almost 800 exploration wells and estimated recoverable oil reserves of around 3.2 billion bbl. Fryklund said these discoveries, together with ExxonMobil and Hess's continued drilling in Stabroek, indicate the possibility of a long-term successful run for companies that invest in the block.
Abstract In May 2015, ExxonMobil successfully brought in the Liza 1 wildcat well, 120 miles off the coast of the South American nation of Guyana in the Stabroek block, in the Guyana-Suriname basin. Prior to the Liza 1 success, there were 22 wells drilled by other companies, all of which proved to be non-commercial. ExxonMobil stated that recoverable reserves from the Liza field – Phase 1 development would be in the range of 0.8 – 1.4 billion barrels of oil equivalent. The Liza field is part of one of the most prospective basins in South America based on a US Geological survey report - the Guyana-Suriname basin. A representative model was created using Petrel, Wellplot Digitizer, PROSPER, CMG and Microsoft Excel and consists of eight (8) producers, three (3) gas injectors and six (6) water injectors as outlined in the ExxonMobil Phase 1 development plan. Simulation results indicate that over a twenty-five (25) year period approximately 456 MMSTB of oil and 3.5 TCF of gas, equivalent to 1.04 billion BOE will be recovered from the Liza Phase 1 development. Based on the Production Sharing Agreement between the Guyana government and ExxonMobil, an economic assessment was undertaken which quantifies the government share of revenues to be obtained from the Liza field – Phase 1 development. The variables in this economic evaluation included capital expenditure (CAPEX), oil and gas price, operational expenditure (OPEX), 2% royalty payment, cost recovery mechanism and 50% profit split to the Guyana government. Based on ExxonMobil estimated capital investment of $US 4.5 billion, an oil price of $US 50/bbl, gas price of $US 2.50/MMBTU and this project's projected operational expenses over the twenty five year period, total new revenue to Guyana over this period will amount to $US8.9 billion. It is also estimated that Guyana's share of the development cost will be paid back within six (6) years of commencement of production of the Liza field.
The offshore oil and gas sector is beginning to recover 2 years after oil prices bottomed out, which has led to cautious optimism in the sector. At this year’s Offshore Technology Conference, held 30 April–3 May in Houston, that feeling was evident, although there is still a strong emphasis on cost containment and efficiency.
This year was the 50th OTC, which has become a bellwether for the health of the offshore industry. Panel sessions, individual talks, and technical sessions focused on a range of topics, including the current state of the industry, reducing costs, breakthrough technologies in a low-oil-price environment, and the growing use of data analytics and digital technologies. More than 61,300 attendees from more than 100 countries gathered at the annual conference.
Below are selected highlights from the conference.
The 50th edition of OTC kicked off with a distinguished panel representing operators and service companies evaluating the contributions of the past half century. And while the panel took a look back at the significant progress and innovation that has occurred since 1969, they also painted an optimistic view of the offshore sector’s future.
The opening ceremony featured remarks from Wafik Beydoun, chairman of the OTC Board of Directors, and panelists Patrick Pouyanné, chairman and CEO, Total; Ryan Lance, chairman and CEO, ConocoPhillips; Jeff Miller, president and CEO, Halliburton; Harry Brekelmans, project and technology director, Royal Dutch Shell; Clay Williams, chairman and CEO, National Oilwell Varco (NOV); and Solange da Silva Guedes, chief exploration and production officer, Petrobras.
Speakers emphasized the progress made in the safety of offshore operations as well as the technological innovation that has occurred since the first OTC was held in a small convention hall in Houston that attracted 2,800 attendees. More than 60,000 industry professionals attended last year’s conference.
After listing some of his company’s significant offshore developments over the years in Abu Dhabi, Africa, and the North Sea, Total’s Pouyanné expressed optimism about the offshore sector’s continued health, noting that many legacy discoveries are still producing or have led to new ones. “The past also affects the future,” he said. Oil price cycles and technical challenges will continue to be managed. “In our industry, anything is possible and nothing is impossible,” he added. “What makes me very confident for the future of offshore and the deep water industry is its capacity to innovate.”
Lance, noting emergence of unconventional onshore output, said offshore projects in the future have to work at the lower end of the oil price boundary. Projects need improved design and efficiency as well as standardization. “Design one, and build many” should be the watchword going forward, he said. The use of data analytics, machine learning, and blockchain all have potential to make the offshore sector more efficient and economic, he added.
Could 2019 be a bumper year for offshore energy development? In just the first few weeks of this year, four discoveries in the UK North Sea and offshore Guyana and South Africa found 1.3 billion BOE--25% of the approximately 5.3 billion BOE high-impact volume discovered globally in the whole of 2018--according to Westwood Global Energy Group. Westwood has identified another 78 high-impact exploration wells either currently being drilled or planned for the remainder of 2019. The expected gross unrisked volume of oil and gas from the 78 wells is 23 billion BOE. More than half the wells are in deep water (Figure 1).