What's next for Macondo?

By Gary Taylor, Oct 13

This is part one of a four-part review of what lies ahead in the wake of the Macondo spill. In this report Platts looks at the future of the resource itself.

WHAT IS GOING TO HAPPEN TO THE RESERVOIR?

Even after the well has been capped, there is one thing that is not any different: BP and its partners, Anadarko Petroleum and Mitsui, hold the lease rights to Mississippi Canyon 252, about 40 miles from Venice, Louisiana, in 4,993 feet of water.

BP won the lease by outbidding five rivals with a high bid of $34 million in March 2008. BP is operator with a 65% stake, Anadarko has 25%, Mitsui 10%. Although the Macondo blowout occurred before BP could release any projections of the reserve potential, several analysts have agreed the company was likely on the cusp of declaring it commercial when the crisis began.

Since then, BP has declined to comment on its plans for the lease once the crisis was under control and no decision appears to be on the immediate horizon. At this point, it could be argued the companies already have invested $10 to $20 billion in the Macondo prospect, including the costs of fighting the crisis.

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A standard commercial deepwater field in the Gulf of Mexico would likely hold oil-equivalent potential of 100 million barrels or more, according to records on other large fields discovered there in the last decade.

So Macondo's future remains in question, whether it will be remembered only as a scene of disaster or also a prospect that contributed to Gulf production.

"We can all agree that this is a strong reservoir and produces light, high-quality oil with lots of associated natural gas," wrote analysts at Tudor Pickering Holt in a report that pondered the rogue field's future.

They estimated the reserves at a range of 50 million to 100 million boe, but predicted they do not expect to see exploitation "anytime soon." Instead, TPH said, another group of companies likely with buy the lease, rename the prospect and ultimately develop the reservoir. As for the wells already drilled at Macondo, TPH said the original blown-out wellbore is "probably toast and unusable." But, TPH noted, another operator could possibly sidetrack and use the two relief wells drilled to intercept the original wellbore at the reservoir to halt the spill.

WHAT ARE THE BIGGEST NEW LESSONS THE INDUSTRY LEARNED ABOUT HOW TO STOP A BLOWOUT IN DEEPWATER?

While the Macondo companies and the government continue to investigate the direct causes of the April 20 blowout that created the crisis, academics and industry experts already have been working on the sidelines to review the current state of deepwater drilling technology in a bid to recommend improvements that could prevent another disaster of that magnitude.

For example, the independent Research Partnership to Secure Energy for America (RPSEA) has released a "white paper" offering recommendations, from a panel that included several high-profile national petroleum engineering experts. That report divides its recommendations among three areas of focus: preventive technologies, response technologies and ecosystem services.

The RPSEA report offers 17 specific recommendations under three headings for preventive technologies described as improved deepwater drilling and completion processes; better monitoring and automatic control; and integrated risk assessment.

Among the specific recommendations for further study, the report suggests the use of dual blowout preventers; automated control of wells to limit vulnerability to human error; enhanced standards for drilling and well completion; requirements for "real-time feedback" from the wellhead equipment that operates tools during drilling operations; industry-wide testing and certification; development of technologies for detecting the introduction of natural gas into the wellbore; refinement of methods to measure and monitor annular pressure on subsea wellheads; and the development of "next-generation cementing technologies."

WILL THE RECOMMENDED CHANGES--OR ANY OTHERS--BE SWEEPING?

"Extreme changes are unlikely," said University of Houston professor Joe Pratt, reacting to the question of whether the Macondo crisis represents such a unique event that major changes in drilling technology are even needed.

"We will have extreme conscientiousness about the best practices and better operations management."

Pratt is an industry historian, not a petroleum engineer. Pratt was unfamiliar with the RPSEA report, but said the technology deployed in the field "does not appear to be at fault" in the Macondo disaster.

Pratt also said he expects the companies to take the lead on implementing any changes in their preventive technologies because regulatory authorities do not own the technology. "Can we fashion a regulatory system that can keep pace with technology?" asked Pratt, adding, "That is the key dilemma."

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