New oil platforms rise high to reach deep (photos)

INGLESIDE — The giants are visible from more than 20 miles away, rising like monuments from the shores of the Gulf of Mexico.

They are oil platforms under construction — huge structures of steel piping, cranes and heavy machinery on top of towering hulls. At least five massive vessels were being built at yards in Ingleside earlier this month, employing thousands amid a resurgence of activity aimed at oil riches in the Gulf.

Royal Dutch Shell, Chevron, Anadarko Petroleum and others are rushing to finish the platforms for duty tapping vast new oil frontiers in the sea’s deep waters.

The facilities are a direct response to technological breakthroughs that are allowing geologists and engineers to find and reach large oil reserves in previously mysterious regions deep under water and deeper under rock.

They are also the first wave of major producing vessels moving into the Gulf of Mexico since business went on hold following the BP oil spill in 2010, said Darrell Hollek, senior vice president of Gulf of Mexico operations for Anadarko.

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And while booming production from onshore shale plays has contributed hundreds of thousands of barrels per day to U.S. oil output, the new offshore vessels are multibillion dollar manifestations of the huge investments and profits in deep-water oil production, where interest from the biggest companies remains high.

“I think you’re going to continue to see a lot of developments in the Gulf because people are having success,” Hollek said.

A typical deep-water project can cost billions of dollars to find and develop compared with as low as $10 million of an onshore well,  said Jim Dillavou, a partner focusing on mergers and acquisitions in the oil industry for accounting firm Deloitte & Touche. But a deep-water prospect can produce 100 times the oil of an onshore well, Dillavou said.

The highly productive offshore wells are likely to keep oil companies exploring and building platforms for the deep regions of the Gulf, Hollek said.

“When we’re looking at where we want to spend the money, we’re looking at where are we going to make the most money,” Hollek said.

The biggest vessels under construction at Ingleside include Anadarko’s Lucius platform and Chevron’s Jack/St. Malo and Big Foot platforms. Shell’s Olympus platform departed the shipyard on Corpus Christi Bay just a week ago  for its mission in the deep water.

When all four go to work, they will add daily production capacity of 430,000 barrels per day — a 30 percent increase in the Gulf of Mexico, although other output may decline as the new platforms come online.

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Deep-water wells produce higher proportions of oil than onshore wells, which bring up more natural gas and other fossil fuels with their oil, Hollek said.

That higher proportion of oil means higher profit, particularly since Gulf of Mexico offshore platforms ship their crude to the U.S. Gulf Coast, where oil brings higher prices than in some other regions in the United States, he said.

“In general, our profit per barrel is higher because we’ve got more of an oily mix than onshore does typically and it’s easy access to the marketplace,” Hollek said.

The advancements that made the new platforms possible began with seismic imaging technology, which allowed geologists to better gauge underground reservoirs. Without those improvements, oil companies would not have been able to find or drill into the reserves they are now preparing to produce, said Surya Rajan, director of upstream technology research for information firm IHS.

Improvements in drilling equipment and technology also are helping companies reach deeper below the seafloor while positioning rigs in water more than a mile deep, Rajan said.

“It’s a lot of these things that come together, a lot of technology advances, that enable much more cost-effective operations,” Rajan said.

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Prior to recent advancements in seismic imaging, many undersea rock layers were invisible to geologists because thick salt layers below the seafloor obstructed the view.

But new seismic surveys, taken from farther away, aim around salt layers to retrieve clear images — key information on reservoirs that has helped push deep-water exploration to a new level, said John Hollowell, Shell’s executive vice president for deep water in the Americas.

Hollowell said such seismic imaging is a “groundbreaking kind of technology that’s allowing us to see the subsurface like we’ve never seen it before.”

“The success of these projects, in many respects, is your ability to see the subsurface better than anybody else,” Hollowell said.

The platforms being assembled at Ingleside will produce from a new generation of deep-sea wells in the Gulf, in areas that weren’t reachable or even visible in the past.

It is in such remote, unexplored areas that the largest new finds worldwide are likely to take place, leading to yet more platforms, Hollek said.

“Deep water is going to be the main part of where we’re going to grow our oil and gas production around the world,” Hollek said. “It’s the place that has been played the least over time.”

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More deep-water activity is likely to mean more construction work for companies like Kiewit Offshore, which drew more than 600 workers from its affiliates worldwide to add to about 2,000 workers building platforms in Ingleside, company President Sezer Fuat said.

And while the rising structures create a stunning skyline against the ocean horizon, they’re about a lot more than the view.

“It’s not just the employment we are creating here, but all of this equipment is being brought here from somewhere in the United States,” Fuat said. “It’s quite good for the economy.”

Jennifer A. Dlouhy contributed from Washington

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