Caught between worlds

Karen Boman

July 1, 2017

Karen Boman charts Chevron’s success at its large Jack/St. Malo development in the deepwater Gulf of Mexico, a project that was sanctioned just prior to the downturn.

McDermott’s North Ocean 102 at work. Photo from McDermott International.

Chevron’s Jack/St. Malo development project marked many firsts for the company. Not only is it Chevron’s first in the Gulf of Mexico’s Wilcox Lower Tertiary trend (LTT), but it is also the supermajor’s first seabed boosting project.

Situated at Walker Ridge Blocks 758 and 759 in 2133m (7000ft) water depth – a nearly two-hour helicopter ride away from New Orleans – the Jack and St. Malo fields took just over a decade to develop after their respective discoveries, in 2004 and 2003. Prior to project sanction, Chevron drilled seven exploration and appraisal wells at the fields between 2003 and 2010.

Formed 38-65 million years ago, the Jack/St. Malo’s Wilcox reservoirs are buried deeper than the more predominant Miocene reservoirs found in the Gulf of Mexico and were formed 5-24 million years ago. According to an OTC 2017 paper by Hjelmeland et al, LTT reservoirs are characterized by strong rock formations, ultra-deep reservoirs of 7620m to 9144m (25,000-30,000ft), high pressures of 17,000-24,000 psi, temperatures of 220-270°F, and a 170-250 scf/stb gas to oil ratio and low permeability, due to tight sandstone reservoirs. With reservoirs starting at 5943m (19,500ft), the floating production project has a total depth of 8077m (26,500ft).

Chevron holds 50% working interest in the Jack field. Statoil and Maersk Oil are partners in the field with respective 25% interests. Chevron owns 51% working interest in the St. Malo field, with partners Petrobras (25%), Statoil (21.5%), ExxonMobil (1.25%) and Eni (1.25%).

Chevron also owns a 40.6% ownership interest in the host facility, with co-owners Statoil (27.9%), Petrobras (15%), Maersk Oil (5%), ExxonMobil (10.75%) and Eni (0.75%).

Dockwise Vanguard hauling Jack/St. Malo hull. Photo from Dockwise/Boskalis.

Writing the playbook during the game

Chevron sanctioned the project for development in 2010. To reduce cost and capture scale, Chevron decided to jointly develop the fields, which are 40km (25mi) apart, said Travis Flowers, Jack/St. Malo asset manager for Chevron at a recent Marine Technology Society luncheon in April. Chevron decided to develop the fields with subsea completions to a single host, a semisubmersible floating production facility located between the fields. The facility has a production capacity of 170,000 b/d of oil and 42 MMcf/d of natural gas, with the possibility of future expansion.

The technology necessary to bring the Jack/St. Malo on production didn’t exist when Chevron first discovered the two fields. To develop them, the company and its partners had to create that technology, Flowers said.

Chevron and partners “wrote the book as they went and still got great results,” Flowers added.

“We went in expecting surprises,” Flowers said. “Most of the surprises have been positive and within the range of surprise as part of any reservoir, particularly a lower Tertiary/Wilcox reservoir.”

The low reservoir permeability – on a level seen in the Permian Basin – posed a challenge for Chevron. Unlike the Permian Basin, where land rigs can drill on five-acre spacing, Chevron was forced to conduct drilling with 400-acre spacing, Flowers said.

To address these challenges, Chevron and Halliburton teamed up in 2007 to develop an enhanced single trip multi-zonal completion system (EMTSZ) (OE: December 2014). This technology allows an operator to run and fracture five zones in a single trip. The ability to reduce the number of trips to perforate wells save not only time, but drilling rig day rate costs, Flowers said.

At Jack/St. Malo, Halliburton’s tool allowed Chevron to conduct successful hydraulic fracturing jobs to effectively open up cliff-based inflow wells. Unique production tracers in each zone allowed Chevron to study samples. As a result, the Jack/St. Malo completion team completed 47 fracs in 10 wells without missing the target, Flowers said.

Besides the first successful demonstration of the completion system, one of the biggest wells that Chevron has ever drilled was at Jack/St. Malo. For that well, Chevron ran a 2.3 million-pound casing string. Chevron also is seeing the highest completion pressure its ever seen, with Jack/St. Malo wells at 9500psi. Chevron will work towards 11,000psi over the next year or two.

Chevron’s Jack/St. Malo development also set another milestone with its first application of deepwater ocean bottom node seismic technology in the Gulf of Mexico, providing images of subsurface layers nearly 9144m (30,000ft) below the ocean floor.

Adding value

Chevron chose subsea boosting technology over artificial lift methods because the technology yielded the best impact on the net value added to the project’s overall present value, according to Hjelmeland et al, 2017. To gain confidence in the technology, Chevron opted to establish a two-year technology qualification program to qualify all components to Jack/St. Malo specifications, such as water depth, pressure rating and shaft power.

Chevron chose OneSubsea, a Schlumberger company, in 2011, to provide subsea pumps, which reside on the seafloor, to boost production to the topsides facility. OneSubsea provided 12 subsea trees, production controls and four manifolds. The boosting technology included three pump stations with 3MW single-phase pumps (rated for 13,000psi design pressures, and differential pressures up to 4500psi), subsea transformers, and pump control modules, associated controls and instrumentation, and a complete topside power and controls system.

The pumps carry production through two, 20km (12.4mi) tiebacks, and risers to the topside processing system on the floating production unit. The pumps were installed in 2133m (7000ft) of water. The boosting system was brought online 2014, with production following late that year.

The use of both subsea boosting and multiphase flow meters allowed Chevron to achieve production of 12,000-17,000 b/d. A constraint in the design means Chevron had to pull the subsea pumps to achieve maximum potential. But, Flowers is hopeful that a minor upgrade of 3000-4000psi next year will boost production from existing wells.

Initially, Flowers said that he was skeptical about using multiphase flow meters, adding that technology is only as good as the quality of data. But, data analytics has allowed Chevron to monitor real-time rates and pressures. Tracking this data also helps Chevron and other owners allocate production, making fiscal management easier.

Working together

In 2014, McDermott International concluded the in-house fabrication of 21 high-specification rigid flowline, manifold and pump jumpers, and the installation of the structures using Derrick Barge 50. The vessel also was used to install over 80 flying leads, five additional rigid production well jumpers and other subsea control and production boost components, including three pump stations weighing 209 tons, to a depth of 2129m.

McDermott also transported and installed 65mi of three control and two power umbilicals with its subsea construction vessel North Ocean 102, along with other related subsea structures.

Samsung Heavy Industries built the Jack/St. Malo semisubmersible hull at its Geoje, South Korea, shipyard. Kiewit Shipyard of Ingleside, Texas constructed the topsides and mooring piles for the platform. In 2013, the hull was transported via Dockwise’s semi-heavy lift vessel Dockwise Vanguard from South Korea to Ingleside, where Kiewit performed lift and set work, and then integration and carryover work to support the semi’s sail away to its final destination in the Gulf of Mexico.

Nexans installed the power umbilicals for Jack/St. Malo that integrate HV power supply and umbilical functions within a single cable cross section.

Lessons learned

Stage one of the project came online in 2014. The second phase of wells started production earlier this year, and a third phase has been sanctioned. The Jack/St. Malo facility has initial production capacity of 170,000 bo/d and 42.5 MMcf/d of natural gas. The company expects to recover more than 500 MMboe over the production facility’s life span. Flowers anticipates that production might be closer to 200,000 b/d of oil in the next year or two.

Crude oil from the facility will be transported approximately 140mi to the Green Canyon 19 Platform via the Jack/St. Malo Oil Export Pipeline, and then onto refineries along the Gulf Coast.

Chevron and partners have seen positive results from the early stages of Jack/St. Malo production. With the project just entering the toddler years of a 30-year life span, however, calling Jack/St. Malo a success may be premature, Flowers said.

Chevron is now looking at future development such as additional manifolds, and ways to enhance reservoir recovery, such as waterflood.

Though it has broken ground in many ways, the Jack/St. Malo development had the misfortune of being designed and built in a $140/bbl price environment, then brought online shortly before oil prices crashed into the $20/bbl range, Flowers said.

“The current $50/bbl [range] oil prices are feeling good right now for Chevron,” Flowers said.

Thanks to digital technologies, Jack/St. Malo is making money in today’s low oil price environment. Well costs are falling and performance rising. But, Flowers said that oil and gas companies also need to collaborate to make new technologies more cost-effective at lower oil prices.

Would Chevron still have pursued the project had it known what oil prices would do? Flowers says yes. But, the project would have been designed differently. Chevron tackled the Jack/St. Malo project because the company needed a host facility in the deepest part of the Gulf of Mexico. The prospectivity of Jack/St. Malo also convinced Chevron officials to move forward.

If developed today, the technology for the project would be cheaper. However, Chevron would have made the project more scalable, and the pace of tiebacks would have slowed. Still, Chevron is excited about the performance, Flowers said.

As for lessons learned, Flowers said that learning from its experience using EMTSZ for fracs would be carried over to other developments. Chevron also will apply the idea of a standardized platform concept to multiple projects.

Scaling up production. Deepwater production goes big with Chevron's Jack/St. Malo Project. Image from Chevron.

Work cited

Hjelmeland, M., Reimers, O., Hey, C. et al. 2017. Qualification and Development of the World’s First High Pressure Subsea Boosting System for the Jack and St. Malo Field Development. Presented at the Offshore Technology Conference, Houston, Texas, 1—4 May. OTC-27800-MS.