Gomez in the Gulf

ATP Oil & Gas Corp. acquired Gomez Field, which is in approximately 3,000 feet of water on Mississippi Canyon Block 711, in September 2003. The lease on the field was due to expire in a month, and it inhabited that gray area of so many marginal finds for the typical exploration company: Gomez contained just enough hydrocarbon to tease, but in quantities too scanty to commercially produce.

The block was estimated to hold about 60 billion cubic feet equivalent (Bcfe) of potential reserves—not enough to justify a standalone development in the deepwater Gulf. Furthermore, a subsea tieback would require a 30-mile pipeline to infrastructure, a distance that nearly guaranteed flow-assurance nightmares.
MC 711 had originally been drilled by Union Pacific Resources in 1997. In 2000, a sidetrack of a confirmation well encountered 125 feet of oil and gas pay in Lower Pliocene sands but was not tested. The property then changed hands, and the next owner was not interested in pursuing development.

“We monitor transactions in the Gulf, in the hope we’ll find a nugget that other folks may not look at in the way that we do,” says T. Paul Bulmahn, ATP chairman and president. The Houston independent thought it might be able to make some money, and it acquired the block.

ATP’s first goal was to figure out exactly what it had purchased. At the least, it had taken on a single-well gas blow-down project. Happily, a reentry of the confirmation sidetrack tested at surprisingly strong rates. The #4 ST1 flowed 13,610 barrels of oil and 52.7 million cubic feet of gas per day during a multiple-day test. Indeed, rates and pressures indicated that potential reserves were considerably larger than initially thought.

But, the distance from Gomez to the nearest production platform was great. “We had a lot of different ideas at the outset, and we investigated several development options,” says Bulmahn. Most scenarios were lengthy—and stretched time horizons were just what ATP wanted to avoid.

The company decided to try something that had not been done in the Gulf since 1995. It would convert Rowan Cos.’ shallow-water semisubmersible rig Rowan Midland to a floating production facility. This approach would allow gas from subsea wells to be processed at the floating facility and then tied into the far-away pipeline infrastructure.
“We were hoping that the conversion would speed up our time to first production,” he says. The company leased the rig from Rowan, and later negotiated with Rowan to acquire the unit outright. “Rowan helped us immeasurably throughout the entire process.”

The retrofit solution was unusual, but not unheard of. New-builds are preferred choices for most operators, as drilling-rig upgrades have their own considerable issues. Nonetheless, calculations of the time that could be saved in the development cycle sealed the choice for ATP.

Hurricane damage
ATP’s semi was in Sabine Pass and in the midst of its retrofit in August 2005 when Hurricane Katrina blew through the Gulf. Out on Block 711, Diamond Offshore Drilling Inc.’s semisubmersible Ocean Voyager was drilling for ATP, readying wells in the first phase of the block’s development. That unit broke loose. GPS data confirmed that it was blown some 25 miles in a semicircle before coming to rest about nine miles north of the block. Not surprisingly, the rig needed several months of repairs after its unscheduled journey.

But the semi in dry dock was fine, at least for the first storm. “We felt very good that Sabine Pass was not hit by Katrina, and then Hurricane Rita roared right across it,” says Bulmahn. Fortunately, ATP was able to secure its unit before Rita hit and sustained essentially no damage.

At the same time, ATP’s difficulties really mounted. “Our problems revolved around getting people and materials to work on our project during the reconstruction efforts in the whole Gulf region,” he says. “It was very challenging to move the project forward.”

Despite the ravages of the hurricanes, ATP completed its retrofit in six months. It renamed its floating production platform ATP Innovator. In keeping with a spirit of originality, it used a mooring system that was a first in the Gulf. ATP upgraded the eight-point mooring system on the rig to 12 points, to ensure that it could successfully site the facility in the wake of post-hurricane regulations. The company believed the lower-cost approach provided better performance than conventional steel systems.

After the platform was set, production began in March 2006. The #4 ST1 and #6 were the initial producers, from three primary pays in Lower Pliocene. In midyear, ATP tied in a third well, #5, to the platform. Processing capacity at the new facility was 115 million cubic feet equivalent per day, which was fully supplied by its three subsea wells.

In total, ATP’s 100%-owned development at MC 711 took just 16 months from project sanction to first gas.

“Time savings were the main benefit from our approach of refitting the drilling rig,” says Bulmahn. “Because of Katrina and Rita, costs for materials and labor went straight north. Our costs probably rivaled that of a new-build, but we shortened our time to production by as much as a year.”

Building a hub
The field was just the beginning. ATP wanted to grow the asset, and it acquired several blocks surrounding Gomez. At a federal sale in 2005, it won MC 667 and 668 adjacent to and north of MC 711. In early 2007, it bought 100% interest in the Anduin discovery in MC 755, south of Gomez. The company agreed to sidetrack #2 Anduin and tie it into its ATP Innovator. That operation also earned it interests in MC 754 (Anduin West) and MC 800 (Gladden).

At present, ATP makes 140 million cubic feet equivalent per day from five producing wells at Gomez, four on MC 711 and one on MC 755. “We’re ecstatic. The property has really been a gem for us,” says Bulmahn.
From acquisition as a marginal property with a single subsea well capable of production, Gomez has grown to a six-block, hub development. Some 61.8 Bcfe has already been produced, and wells connected to Gomez Hub contain nearly 200 Bcfe in remaining proved and probable reserves. Indeed, Gomez is the firm’s largest project on production, and it accounts for almost a fifth of the company’s proved reserves.

ATP recently completed a facilities upgrade that enables it to process third-party production. Capacity is 200 million cubic feet equivalent per day. Now, up to eight wells can be produced at the facility.

This year, ATP is refining compression on its unit, in preparation for bringing more gas onstream in 2009. Houston-based Newfield Exploration Co. plans exploratory wells on Anduin West and Gladden. ATP owns 25% and 10% interests on those blocks, respectively. Additionally, Calgary-based Nexen Inc. owns interests in MC 755, in partnership with Newfield.

“Gomez has been very good to us, and now we’re looking forward to enjoying both lower unit production costs and regional growth opportunities,” says Bulmahn.