The History of Offshore Oil and Gas in the United States

The History of Offshore Oil and Gas in the united stated In the 1890s, some wells had been drilled in the ocean which was connected to the shore by wooden piers. This was the start point for the USA to go to the sea for finding more oil and gas. A few years later, in the 1930s, Shell and Texaco decided to drill the wells in South Louisiana by moveable barges. In 1937 two independent companies started to drill in the Gulf of Mexico by hiring the construction company, Brown and Root. That was the first freestanding structure in the ocean in 14 feet of depth and 1.5 miles far from the shore and Louisiana was the nearest coastal community. This structure was named Creole Field. The Gulf of Mexico is the first place of offshore generation in the USA. From the geologic point of view, this area because of the Mississippi River and brought the sand through the millions of years, is the best place for trapping the oil and gas by salt domes. Because of the hundreds of discovery in this place, the geology discovery stopped at the shoreline.

During the construction of the Creole platform, many of pilings knocked out due to the hurricane. The risk was so high and because of the lack of crew on the platform and the condition of the sea the commuting back and forth of workers were so difficult. The marine environment set some regulations which oil companies should adapt land-drill offshore. The companies should squeeze their facilities such as drilling complex and production and put them in small platforms. That is the huge challenge for the oil companies to find the solution with regards the bad condition such as wave, hurricane and wind for speed up their work. After the Second World War, the US turned to buy millions of automobile which this amount was about 40 million cars. This action caused booming demand for gasoline and other oil products. On the other hand use of oil for heating, their houses made the USA as the leading consumer of fuel. In 1945, the USA imported 7 million tankers of gasoline per day. This pushed the oil companies to return to drill in the open waters. This needed to develop technology and equipment. Some development by the US Navy such as radio and sonar positioning open new way for oil offshore exploration. Also, the Navy experimental diving unit which trained the divers in underwater operation in school, introduce the mixed-gas and saturation diving technique which is vital for offshoring operations. In 1947 Kerr-McGee oil industries drilled the first production well which was located 10.5 miles beyond the Louisiana coast.

Each new step to implement a new project improved the technology. This size of this platform was reduced (around 1/20 the area of the Creole platform), as a result, the cost decreased. In 1948, by introducing the new concept of latticed steel templates by Humble oil, the integrity of structure increased compared to wood piles. In that time, a bad pause in all project in the US continental shelf due to political decision occurred. In 1954 after a few years, the offshore activities revived and mobility in drilling was the new horizon for the offshore industry. The cost of exploratory well reduced significantly compared to a fixed platform. This submersible drilling barge was named Mr Charlie to discover the oil and drilled one place after one place to find the oil. The day rate of Mr Charlie was $6000/day. It found the two largest oil field in the Gulf coast near the mouth of Mississippi River. Other companies like Zapata offshore company, use emerging ‘jack-up’ rigs. This hoisted the platform out of the water by jacking the series of cylindrical legs to the bottom, which let to drill into the water more than 100 feet. In 1956, %26 of the exploration well reached the oil and gas while this number for onshore was %11. By 1957, there was 250 production platform in federal water and 446 in state and federal waters. Louisiana and Texas were producing 200000 barrels per day and the rate of offshoring was increasing rapidly, although only 3 per cent of total US production accounted for offshore. After a while, most of the drilling could not find the oil and gas moreover, hurricane Audrey caused destroy of offshore infrastructure and 500 people tragically perished. Because of economic constraints and oversupply of crude oil because of imports and decrease in finding new wells, they decided to go future in deeper waters.

After seven years searching and development, in 1962, Shell introduced the new kind of floating drilling platform which was a mobile unit was called Bluewater 1. This consist of three large columns on each side that connected the platform to the submerged hull. This could not stand in the heavy wave action because the hull could not ballast to rest safety below wave level. Bluewater 1 classified as a first semi-submersible for 300 feet but it was equipped to operate in 600 feet. In that time Shell for complete the first floating platform used the remote controls for subsea wellhead because the limitation in diving (was 150 feet). In 1962 Federal government helped the offshore exploration by tightened of importing oil. This decision protected the domestic market and increase the investment in offshore. Then the demand for leasing the more area such as west of Louisiana and Texas increased. By September 1963, nearly 90 drilling operations were in progress. In 1968, 14 of the 62 the large field discovered in the USA were offshore Louisiana. The offshore production of Mexico Gulf increased from 348000 barrels per day to 915000 barrels per day from 1962 until 1968. In 1962 Shell oil equipped the drillship Eureka with the first automatic dynamic system for operating in 600-4000 feet. In 1962, in the geological survey, the magnetic sound recording was used and in years later, digital sound recording was used. Using the seismic survey and with the help of a computer, they reached the three-dimensional modelling and could better understand from the seabed. This development in 1969 pushed the production operation to 350 feet water. At the end of the decade (1968), the cost of leases became more than the price of oil, also Exxon-Texaco spent 350 million dollars for leases that yielded nothing. The important natural disasters which they should be into their accounts were hurricanes. In 1961 hurricane Carla destroyed a large number of the pipeline due to activated the soil movement.

Hurricanes Hilda and Betsy in 1964 and 1965 destroyed 20 platforms and the main reason was the height of platform deck which were too short (around 70 feet) which were too low for waves. After the disaster, the important thing is how fast can bring back the operation rate to the previous level. The vessels were daily rented and every delay in operation increase the costs. The main common unpleasant happens are blowouts, helicopter crashes, diving accident and routine injuries on a platform in that time, they never think about safety and also Federal oversight followed the philosophy of “minimum regulation, maximum cooperation”. In 1969 a blowout on union oil company platform which spills 800000 to 1000000 barrels of oil became it the largest offshore drilling accident in the USA waters. Offshore operators faced with political and climate regulation. But after a while, more regulation for increasing safety was passed. In the 1970s, the domestic production was not enough for the demands and on the other hand, the oil price tripling to $10 per barrel, persuaded the oil companies to develop new offshore reserves. In 1974, Federal leases sale of offshore Louisiana field, by paying the $2.17 billion in cash for leases covering 522000 acres and depth beyond 1000 foot. In 1975, Shell announced that it found the new reserve with the depth of 1000 feet and estimated that this reserve capacity is about 100 million barrels. In that time, Cognac pioneered other discoveries and introduced the “Flex Trend” technology which was one of the most technologically sophisticated efforts ever attempted for offshore. The production of oil had fallen from 1 million barrels in 1972 to 800000 barrels in 1978. In 1984, Shell invests on deeper waters by $45 million custom-designed, the state-of-the-art seismic vessel which provides high-quality seismic data.

But in 1985-1986 because of falling down the oil price due to the saturated market by crude and disappointing finds, some of the drillings sucked in the Gulf of Mexico. Some analysts began to write off the Gulf of Mexico as the Dead Sea. But Shell developed Bullwinkle in 1988 by investing $500 million, which this platform is 162 stories high taller than Willis Tower (the tallest building in the world in that time). In the 1980s, they found that the Arctic region held the highest resource potential of anywhere in the United States. Companies turned to this place and started to drill the wells although most of them found nothing. In 1994 Shell could extract oil with the rate of more than 10000 barrels per day which was the big breakthrough and even with the price of $20 per barrel, it was profitable. Auger Company designed to handle 42000 barrels of oil per day and 1000 million CF gas per day from 24 wells. By the late 1990s, TLSP increased its capacity to 105000 barrels per day of oil and 420 million CF gas per day. The subsea technology especially for gas made economic sense in the Gulf of Mexico. In 1996, Shell wanted to go further and extended water depth capability beyond 3500 feet and Mensa gas field had the depth of 5400 feet. In 1994, Shell flared and vented 6 million CF gas per day without permission and it had been continued for four years. In 2003 civil settlement, Shell agreed to pay $49 million. To reduce the cost Shell introduced a different contracting model with alliances.

The alliances in BP should share the technology and patents (because the cost and risk were too large to go it alone). Key relationships created in this alliance included the Italian firm, Belleli, which built the tension-leg platform hull; J. Ray McDermott, which fabricated the topsides; and Aker Gulf Marine from Corpus Christi, which integrated the two the advantage of this was reducing the cycle time of design and bidding and contracting. In September of 1999, the A-7 well at Ursa by producing the 50000 barrels per day broke the record. In 1990 most of the productions were from shallow water of Gulf of Mexico which was rarely reached to 250 feet, while in 1998 the average depth was about 1000 feet. By the early 200s, the analysis indicates that the new golden triangle, Gulf of Mexico, Brazil and West Africa, was the place that more likely to found oil. In the 2000s, offshore oil exploration and production became global and lots of enterprises around the world wanted to search in deep-water of Gulf of Mexico such as Norway’s Statoil, Brazil’s Petrobras and France’s Total. In 2001 BP found 2 wells, one of them was located 5 miles away from Thunder Horse which contains 500 million barrels and the other one was founded in 7000 feet of water at the Blind Faith in the Mississippi Canyon. And in 2002 BP announced that it wanted to invest $15 billion during the next decade on drilling and developing these discoveries. In that time BP had become the largest-acreage holder in deep water Gulf with more than 650 tracts in waters and depth of 1500 feet. BP and contractors developed a new weld technique and refurbished all affected subsea equipment on Thunder Horse and Atlantis.

In 2009, production rate reached 250000 barrels per day which consist of 4.5 percent of total US daily production. In 2009, Transocean’s Deepwater discovered for BP and found one of the largest discoveries by the amount of 4 to 6 million barrels of oil with the drilling in 4000 feet of water. Six months later in 2010, Shell started up production at Perdido spar in 8000 feet of water and Perdido was the deepest offshore platform in the world. Its good to say that, if the water depth down to 10000 feet, well shut-in pressure can be more than 10000 pounds per square inch and the bottom-hole temperatures can exceed 350 degrees Fahrenheit. The big problem here is the hydrate, when the methane with this pressure comes up and temperature fall. Hydrate can stock the well or pipeline during the transportation which should be taken in account. The western and central Gulf of Mexico which includes offshore Texas, Louisiana, Mississippi, and Alabama, is one of the major petroleum-producing areas of the United States the production rate in this part in 2017 was 1.65 million barrels per day which consists of 17 percent of total the USA oil production.

A mobile drilling platform in federal water offshore Louisiana, 1957 Oil production in the US Federal zone, offshore Gulf of Mexico. The main challenges related to offshore Logistics For the oil and gas industry, the important issues nowadays are changing the traditional supply chain models and implement a highly integrated approach to decrease the logistics costs and increase the profit. Supply chain challenges are wide and it can consist health, safety and security and environment management, lots of complex operations and drilling with abundant material, plan changes a lot which affect the material demand and service. One of the main challenges is where the logistics can be located in large projects to cover different site. Some energy companies for tackling this problem decided to put their supplies near remote sites and materials are ready and some of them which are not ready, air charter services utilized, but this plan is so expensive. Maintenance costs in position and using air charter in case of needs can rise dramatically up the logistics costs. The Arctic is the place that there are lots of Logistics challenging. There are different companies from different countries exist there to drill and operate for extracting more oil and gas. Alaska which belongs to the United States is the place that American’s companies do not neglect. Prudhoe Bay oil field on Alaska is the largest oil field in North America. One of the challenges in that place is the lack of knowledge about the region, especially in winter difficult to forecast the fog or hurricane or other natural disasters. Some other challenges are communication limitations effects. For solving these problems companies should Use of advanced tools and the vessels have to be better prepared for the unknown with more specialized personnel, more manning, and better equipped.

Companies also should corporate closely with researcher and do more research with a collection of analyses of their field experiences. Another logistics problem is to reduce the emission of co2 or other toxic which influence on nature. The solution is that companies should redesign their vessels to increase their integrity in case of collisions and reduce the emission or close to zero as possible by using LNG as fuel. The new environment challenge is noise emission which can influence on mammals lives and can create problems for a rig and onboard the vessels. In routing the vessels for supply vessels or Logistics activities, it is important that the routes must be safe. But people using the same region for leisure activities. The reasonable action is using safe navigation tools and uses the radar and security measures against destructive action. For logistics the daylight is vital but the oil offshore platform in some part like Alaska where especially in winter there are short daylight hours, influence on a capability of the vessel to operate. Therefore, the amount of sleep hours for crew and vessels is high but the demands should be fulfilled, then they have to operate more effectively in the short hours which can use the sunlight but sometimes in winter the weather is so bad even in the day. Some other actions which should be done are using night navigation tools, illumination of vessels and added crew to reduce the time of duty. The important challenges for supply vessels are cold climate and losing visibility.

Low temperature, high-density fog, snow and wind will influence on workability on board. This condition may cause challenges for deck machinery, equipment work on deck and ice on antennas causing the problem for navigation and communication. These are the severe problems but some activities can reduce the influence of them on logistics activities. Winterization of vessels (which means heat tracing all equipment, preproduced escape ways for floors and stairs, operation manual,…), Low temperature design properties for equipment and materials and equipment for removing ice and electrical heating of windows, deck and valves are some activities which can be done to reduce the idle time of vessels and enhance the productivity of supply operations. The figure below shows how the different factors influence on the functions the vessels have to fulfil and the configuration of the vessels and their equipment.