In the early 1990's Shell held a dominant leasehold in the deepwater Gulf of Mexico. Development of this leasehold faced several challenges including the need for significant technology expansion, staff limitations and limited subsea experience relative to the U.S. based staff. This paper discusses the strategies established at that time in order to overcome these challenges. It traces the execution and evolution of those strategies through the 1990s up to the present day. Finally, it summarizes the current status of Shell's Gulf of Mexico subsea portfolio and discusses plans forward.
Shell has one of the industry's largest leasehold positions in the deepwater Gulf of Mexico and has consistently led the way in producing from ever-deeper waters. Through 1999, the company drilled 81 exploration wells in depths greater than 1,500 feet, resulting in 36 discoveries.
However, during the early 1990s, Shell faced a dilemma. Among the company's deepwater discoveries were a promising portfolio of reserves, but few fields large enough to justify the huge expense of installing large surface-based production systems to develop them. Additionally, the sheer number of these discoveries and time constraints on the leases forced the company to look for alternative approaches.
The solution for Shell was to go with subsea production systems.
Much of the original subsea technology had actually been developed by Shell in the 1960s for fields off the coast of California and, later, in the Gulf of Mexico. However, the technology had fallen into disuse in the Gulf of Mexico and been superseded as advancements in fixed structure design allowed this solution in water depths beyond 1,000 feet. In the early 1990s, as discoveries moved deeper into the Gulf of Mexico, the idea of subsea developments once again came to the fore.
Today, Shell operates 14 highly successful subsea fields in the Gulf of Mexico, each one put into operation in a shorter time than the one before and at lower cost. Four more are currently under development. Subsea success, however, didn't come easily.
When the determination was made to install subsea systems in the deepwater of the Gulf of Mexico, it marked a step change from the company's then-current approach. As a result, the subsea team faced enormous challenges:
In 1993, Shell's deepwater staff included only a few U.S.-based engineers with subsea experience. To that time, the company had been focused on leading the way in serving the deepwater of the Gulf of Mexico with large fixed structures and TLPs. Ultimately, the fixed structuresand TLPs created the infrastructure for the development of smaller deepwater accumulations. However, when subsea was selected as the preferred means for exploiting these smaller reservoirs, there was not a large base of subsea expertise from which to draw. Moreover, it was clear that these projects would be sparsely staffed, requiring the project managers to find innovative ways to support their undertakings.