Offshore Oil and Gas
When fossil fuels formed under the pressure of newly emerging rocks, they formed in a world that was geologically very different from today’s world. Where there were seas, there is now land and vice versa. As a result of these processes, a lot of the oil and gas the world uses today comes from offshore deposits. Most of the undiscovered oil and gas resources today are also located under the seafloor of the world’s oceans. For the extraction of hydrocarbons, the oil industry has developed a whole branch of exploration and production, targeting these offshore deposits.
A History of Offshore Drilling
Offshore drilling began not long after onshore drilling. According to some sources, the earliest offshore wells got drilled in the Grand Lake St Marys in Ohio, in 1891. These wells got drilled in shallow water from platforms standing on piles. The first salt-water offshore wells, according to the American Oil and Gas Historical Society, were built in 1896, in the Summerland oil field in California. Those wells were, too, constructed in shallow water. In fact, until the late 1940s, no company dared drill further than a few hundred feet off the coast.
What oil producers did then was build piers into the sea and mount ordinary onshore rigs on them. Images from that time show rows of piers extending into the sea, dotted by oil rigs. That changed in 1911 when the Gulf Refining Company drilled an oil well in Caddo Lake in Louisiana without using a pier. Instead, it used tugboats and barges, and floating drivers for the piles on which it erected the rig. Other wells in the vicinity soon followed.
The prototype of what we now call a fixed oil platform came more than 20 years later. In 1938, an engineering firm called Brown & Root Marine Operators built a wooden platform a mile from the Louisiana coast with wooden pilings driven into the seafloor to keep it in place. A hurricane proved the structure was not all that stable in 1940 but the Creole platform got rebuilt following the hurricane and production continued.
The first offshore oil well to get drilled out of sight of land came in the late 1940s, also in the Gulf of Mexico, as it began to take the shape of the major producing region we know today. At 10 miles from the coast, the Kermac Rig No. 16 stood in about 20 feet of water, and it withstood the hurricane that hit the Gulf of Mexico just a week after the rig was installed.
Since the 1940s, offshore drilling technology has been improving consistently, and today we have the technology and equipment to explore for and extract oil and gas from even ultradeep waters economically.
Before drilling begins at an offshore location, exploration and production companies conduct a series of surveys to determine whether drilling would be justified. Offshore oil and gas production, despite the progress made in technology and cost reduction, is still more expensive than most conventional oil and gas operations onshore, so preliminary exploration is even more critical offshore than onshore.
Magnetic surveying and gravity measurements are conventional means of determining what sort of rocks lie underneath the seafloor and what the chances are of those rocks bearing oil and gas.
Magnetic surveying involves detecting anomalies in the intensity of magnetic fields in sub-seafloor rocks that may indicate the presence of what petroleum engineers call oil and gas traps.
Gravity surveying focuses on one property of rock formations: density. Since the denser a rock is, the less likely it is to be reservoir rock, data about the density of different rock layers can also tell explorers how likely it is for a particular segment to hold oil and gas.
Seismic surveying, of course, is also an integral part of offshore exploration. It involves sending shock waves into the rock under the seafloor and recording the time it takes for it to return, reflected or refracted, and give the drillers data about the properties of the geology.
The combination of these methods as well as sampling cores from the rock helps establish whether the likelihood that oil and gas being present in the rock is high enough to justify drilling an appraisal well. If the answer is yes, exploratory drilling begins.
Offshore Drilling Equipment
For the most part, offshore drilling requires the same equipment as onshore drilling. A rig, a drillstring with a drillbit at the end, and a turntable are the essential equipment for drilling. (Along with a power source and the drilling mud that facilitates drilling by cooling and lubricating the drillbit).
A blowout preventer that is a critical component of an onshore wellhead is even more critical in offshore drilling because, unlike onshore, it is hundreds, often thousands of feet below the surface of the sea or ocean and a lot more challenging to access for maintenance or repairs.
There are also several pieces of equipment that are special to offshore drilling. These include:
Templates: Subsea templates are steel structures that play the role of a foundation for other structures at the bottom of the sea, including wellheads, Christmas trees, and manifolds.
Manifolds: These structures are installed at the wellhead to transfer the oil and gas from it to the subsea pipelines that will carry them to the shore or the floating, production, and storage vessel.
Marine riser: The riser is a steel pipe that connects the wellhead and the BOP to the surface to keep the drilling mud flow cycle going. Without a riser, the mud once flushed down into the wellbore would just spill out rather than return and be reused.
Offshore drilling rigs get broadly divided into two groups: fixed and floating. Within these groups, there are several types of rigs.
Fixed platforms include barge rigs, jack-up rigs, and tension leg platforms.
Barge rigs get used in shallow waters of no more than 20 feet and other damp environments but not in deep water. They are fixed to the bottom of the basin via anchors or submerged to rest on the bottom.
Jackup rigs are the most common offshore drilling rigs that feature support legs. These can be either open-truss legs — steel structures similar to electrical towers — or columns, also made from steel. Column legs are cheaper to produce than open-truss legs, but they are less stable, which confines their use to depths of up to 250 feet, while jack-ups with open-truss legs can get used at depths of up to 350 feet.
The jack-up rig floats to the drilling site with its legs raised, and once it reaches its destination, these are lowered — jacked down — to fix the rig to the seafloor. While this fixing takes place, the drilling equipment gets automatically jacked up to the above-surface part of the installation. Once drilling is complete, the legs of the jack-up rig get raised again, and it floats to the shore or the next drilling location. This ease of use is what has made jack-ups so popular.
Tension leg platforms feature buoyant hulls for the topside — the part of the platform that is above water — and a system of “tendons”, or tension legs, that fix it to the seabed. These tension legs allow for horizontal but not vertical movements, which has made them popular in hurricane-prone areas such as the Gulf of Mexico. Meanwhile, the hulls, filled with air, keep the topside floating.
Floating rigs can be semisubmersible platforms, drillships, and floating production, storage and offloading vessels, or FPSOs.
Semisubmersible platforms, as the name suggests, are not fixed to the seafloor but only partially submerged and held in place by water ballast. There are two types of semisubs based on the way they are kept in place: bottle-type and column-stabilised.
Bottle-type semisubmersibles have hulls in the shape of bottles below the deck. These are filled with water to keep the platform in place.
Column-stabilised semisubmersibles feature, in addition to the water-filled hulls, a system of columns that connect the hulls to the deck, i.e. the hulls are not directly welded or bolted to the deck.
Both types of semisubmersibles are also anchored to the seafloor to stay in place. They can drill in water depths of up to 5,000 feet and are suitable for drilling locations with harsh weather as their semi-submerged state enhances their resilience to winds and waves.
Drillships can get used in depths of over 10,000 feet, which makes them the only suitable option for ultradeep offshore oil and gas deposits. They are also autonomous in terms of movement from one drilling site to the next one, unlike the other types of drilling platforms.
Because they get used in ultradeep waters, drillships need extra attention to stabilisation. This attention, in addition to the mooring, comes in the form of dynamic positioning systems, or DPS. A DPS involves several thrusters located at different points along the length of the drillship. These move to compensate for wave and wind movement directed by an onboard computer. Mooring is used in relatively shallow waters, while DPS gets deployed at ultradeep drilling locations.
FPSOs take over after the drillship finishes. These are vessels that take in oil and gas from several wells and accommodate production and processing equipment on deck along with storage capacity in the hulls. The oil and gas are kept there before being taken to the shore. That can happen via pipeline (for gas), or by loading oil onto another vessel to transport it to the coast. If there is no pipeline for the gas, it is either flared or injected back into the wells to boost production.
FPSOs can be moored to the seafloor either centrally, in a way that allows them to rotate in response to changes in the weather, or from the bottom up, meaning from multiple locations on the seafloor. Their multifunctionality is the best and most cost-effective option for offshore fields in areas without any oil production and transportation infrastructure.
Drillships and FPSOs are likely to become even more popular in the coming years and decades as the world’s more easily accessible offshore oil and gas deposits get depleted, and E&Ps push further out at sea in search for commercial reserves.
Most significant Offshore Fields and New Discoveries
It is hardly any surprise that four of the five largest offshore oil fields in the world are in the Middle East. Russia, Brazil, the United States, and Norway have also made a name for themselves as home to some of the largest fields, and tiny Guyana may soon join these ranks, too.
The biggest offshore oil field in the world is the so-called Marjan Complex in Saudi Arabia. It has 17.24 billion barrels of oil equivalent in remaining reserves, according to a ranking by Offshore Technology. It comprises several fields but is viewed as a single producing area.
Next is the Safaniya field, also in Saudi Arabia. It has 17.14 billion barrels of oil equivalent in remaining reserves. Its average daily production capacity is over 1 million barrels.
The Zuluf field, another of Saudi Arabia’s giants, has remaining reserves of 11.37 billion barrels of oil equivalent, of which over 11 billion barrels are petroleum and other liquids.
Fourth on the list of top offshore fields is Upper Zakum, in the UAE. Upper Zakum has remaining reserves of 11.064 billion barrels of oil equivalent.
Next is an entrant from Kazakhstan. The Kashagan oil field in the Caspian Sea has recoverable reserves estimated at between 9 and 13 billion barrels of oil and production rate of over 400,000 BPD.
Another giant offshore field that may hold up to 13 billion barrels of crude is Buzios, in Brazil’s pre-salt zone. The subsalt zone is currently contributing about two-thirds of Brazil’s total oil output from just three fields: Lula, Buzios, and Sapinhoa. Lula is pumping at close to 1.1 million BPD, with Buzios at more than 440,000 BPD, and Sapinhoa at some 203,000 BPD.
Looking forward, the star of offshore drilling is no doubt Guyana. Thought the tiny South American country only recently became visible on the international oil map after Exxon and Hess made a string of discoveries in the Stabroek Block that have brought the total reserves to an estimated 6 billion barrels and change. Discoveries are being made in other parts of the Guyana continental shelf as well.
In gas, the largest producing deposit remains the North Field/South Pars that Iran and Qatar share. Qatar recently lifted a moratorium on production expansion at the North Field in a bid to maintain its number-one status as LNG exporter and Iran is trying to increase production from South Pars as well, despite sanctions.
Australia and the U.S. Lower 48 have become a force to be reckoned with in natural gas and LNG in recent years, too. Australia even overtook Qatar as the world’s largest LNG exporter at one point last year and is striving to do it again, even at the expense of a gas shortage at home.
Russia is announcing new oil and gas — mainly gas — discoveries, too. This year alone it reported new oil and gas discoveries of 1.5 billion barrels of oil equivalent in the Arctic. Developing these reserves, however, will be challenging because of concerns about the changing climate.
The Economics of Offshore Oil and Gas
Offshore drilling is more complicated than onshore drilling because of the environment, so it is no wonder costs are substantially higher. As of 2018, the cost of deploying a drilling rig offshore was as much as 15 to 20 times higher than the costs associated with drilling an onshore well. Yet E&Ps are working on those costs and have managed to reduce them. They have also shortened drilling times and the times from striking oil to beginning production, which accelerates the start of the payback period on what is invariably a substantial investment.
Offshore drilling is unlikely to become cheaper or even as cheap as onshore drilling in some parts of the world, at least. Still, it is becoming more efficient as is exploration, in large part, thanks to advanced surveying and drilling technology. That contributes to lower costs and makes more projects viable, even in deeper waters. These advancements will ensure a continual supply of competitive oil as legacy producing fields near depletion.