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Deepwater Gulf of Mexico - America's Expanding Frontier
SOURCE: U.S. Department of the Interior, Minerals Management Service, Gulf of Mexico OCS Region






PREFACE

Photo of Chris C. Oynes
The Gulf of Mexico is now in its ninth year of sustained expansion of the deepwater frontier. Deepwater oil and gas exploration and development in the Gulf of Mexico OCS has succeeded probably beyond the most optimistic dreams of most of us and shows no sign of diminishment. This is the fourth report issued by MMS chronicling the beginning and unfolding of this frontier.

Since those first steps taken by industry in 1995-1996, we have entered into a sustained, robust expansion of activity that promises to continue for many years to come. As 2004 begins, we have 90 hydrocarbon production projects on line. Production from the deepwater frontier grew to an estimated 959 thousand barrels of oil per day and 3.6 billion cubic feet of natural gas per day by the end of 2002. This was a rise of 535 percent and 620 percent for oil and gas, respectively, since 1995.

About 750 exploration wells have been drilled in the deepwater Gulf since 1995. At least 100 deepwater discoveries have been announced since then. Significantly, in the last three years, there have been 11 industry-announced discoveries in water depths greater than 7,000 ft (2,134 m), and these ultra-deep discoveries have the promise of opening up entirely new geologic frontiers.

Of critical note, the new technology that has been developed and deployed to produce the Gulf of Mexico deepwater resources is the marvel of the world. Never-before-heard-of production from spars has now accelerated so that eight spars were in production by the end of 2003 with three more spars scheduled to begin production in 2004. These spars range from classic spars and truss spars to the first-ever cell spar, scheduled by Kerr McGee for installation in 2004. Similarly, a few years ago, there were no mini-tension leg platforms and now the SeaStar and the MOSES have arrived. Subsea production has expanded from a water depth of 1,462 ft (446 m) with Placid Oil Companyís Green Canyon Block 29 project in 1988 to 5,318 ft (1,621 m) with Shell's Mensa in 1997, and to 7,216 ft (2,199 m) with Marathonís Camden Hills in 2002. Shell and BPís Coulomb/Na Kika project, scheduled this year, will establish subsea production in 7,591 ft (2,314 m) of water.

The role played by the MMS in this major energy expansion has been critical ó from ensuring the receipt of fair market value for the sale of the leases to the evaluation and approval of new technology, and to facing new challenges in drilling and new environmental questions. The MMSís development of new environmental review procedures to ensure timely but thorough review and protection of environmental values has been innovative and critical to keep project timelines minimized.

Chris C. Oynes
Regional Director
Minerals Management Service



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Cover and Title Page

PREFACE

INTRODUCTION

BACKGROUND

LEASING DRILLING AND DEVELOPMENT RESERVES AND PRODUCTION SUMMARY AND CONCLUSIONS . . . Feedback