Addressing Transportation Needs for Deepwater Gulf of Mexico

Abstract

Abstract Crude oil offtake from offshore installations by water borne transportation(oil tankers) to a delivery point to the onshore U.S. market is currently notan alternative in the Gulf of Mexico (GOM). This is in part due to existingregulations that do not consider shuttling as an acceptable deepwaterdevelopment technology for the GOM. The only current method of crude oil exportis through pipelines. However, most major exploration and producing companiesare expanding their search for oil in the Gulf of Mexico and with technologyimprovements are moving further from existing offshore infrastructure and intodeeper water (5,000 ft to 10,000 ft). Alternatives need to be developed for thetransportation of these deepwater production volumes to market. Oiltransportation via shuttle tanker has been an accepted offtake solution inother major producing area's of the world and is now being considered for useas a viable alternative for oil offtake in the future development of thedeepwater Gulf of Mexico. Endorsement of shuttling as a transportation alternative for deepwater willchange the way producers develop deepwater fields making marginal fieldseconomically attractive through:Reduced capital costs by redirecting capital costs for oil pipeline offtaketo a shuttling tariff based system on a $/BBL basis which the producer accesseswhen required. Shuttling is flexible and can sustain a wide variation in dailyproduction flow rates offering the producer varying capacity andflexibility.Market alternatives will offer the producer flexibility to access marketsalong the Gulf Coast or access to transportation systems servicing the Mid-Westimproving netbacks and crude quality enhancements.Phased Development can generate early production volumes from deepwaterfields with temporary facilities, enabling cash flow while field data can beevaluated for the design of fit for purpose facilities. Introduction Currently, there are sixteen 16 key oil trunk pipelines servicing the deepwaterGOM (see table below). (available in full paper) With the exception of the HighIsland and Hoover system these offshore pipelines tie into an onshore system atClovelly and St. James. Clovelly also provides access to the Texas market andto St. James which provides access to markets in the Mid-West. Given the current industry success in deepwater (Table 1) the potential existsto fill the existing offshore trunkline capacity and strain the onshorepipeline facility capacity. Transporting these new production volumes to marketwill require the development of a crude oil shuttling tanker fleet and theexpansion of the current offshore and onshore pipeline infrastructure. Tounderstand the future state of this shuttle fleet, it is necessary tounderstand the US regulations that govern this industry, the current state ofthe US shipping industry and the future vision of field development in thedeepwater Gulf of Mexico.