New Life for Old Iron in the US Gulf

Abstract

Reduce. Reuse. Recycle. We’ve all heard the mantra and likely recall it as our grade school introduction to the world of recycling. On a personal level, that meant collecting tin cans, flattening cardboard, or gathering plastic or glass receptacles. Many of these waste products return to industry and reemerge as something new and are kept out of a landfill, at least temporarily. When it comes to recycling in the oil and gas industry, many have looked at assets that have reached their end of life in one service and attempted to repurpose them for another. Offshore rigs have been sold out of the industry to become everything from early warning radar stations for the US military (see the SBX-1) to potential offshore launch pads for Elon Musk’s SpaceX program and beyond. Many offshore platforms in the Gulf of Mexico (GOM) either find their way to the scrap yard or into the rigs-to-reefs program, which reuses old, fixed platform jackets as fresh ecosystems for marine life. However, something that is often talked about but rarely occurs is the reuse of an existing, but idled, production platform on a new field. This appears to be the fate of Independence Hub (IHub)—the floating centerpiece to an ambitious Anadarko Petroleum-led $2-billion deepwater GOM project that aligned several different players and various natural gas discoveries in the mid-2000s (OTC 31155). The last well at IHub ceased production in December 2015, after just 8-plus years of operation. The facility hosted produced volumes of more than 1.3 Tcf of gas, exceeding initial projections for the project by more than 30%. IHub was idled soon after and ultimately decommissioned in 2019. A New Lease on Life In May, offshore producer LLOG acquired IHub; it plans to modify the deep-draft, semisubmersible platform to develop a pair of discoveries in the Keathley Canyon area of the GOM. The reborn platform will be renamed Salamanca and will host oil and gas production from the Leon find in Keathley Canyon Blocks 642, 643, 686, and 687 and the Castile discovery (formerly Moccasin) in Block 736. As currently envisaged, two wells from Leon and one well from Castile will be tied back to the unit at its future installation site in Block 689 in 6,400 ft of water. Initial production from the joint development is expected in mid-2025. “By modifying a previously built production unit compared with constructing a new facility, we are able to reduce significantly the time and cost to bring these discoveries online,” said Philip LeJeune (according to his LinkedIn), president and chief executive of LLOG. “This development will add a significant new source of needed domestic oil and natural gas production when it comes online.”