Anadarko Makes Concept Call on Shenandoah

Monday 10 October 2016

Anadarko Petroleum has confirmed its plans to develop the significant Shenandoah discovery in the deep-water Gulf of Mexico.

The US independent plans to develop the find using a semi-submersible platform designed by floater specialist SBM Offshore.

Anadarko confirmed its decision to go with a semisub, but stressed that more work must be done before a final investment decision can be taken.

“While we, along with our partners, continue working towards determining the commerciality of Shenandoah, we have chosen a semi-submersible concept to support the potential development,” a spokesman stated.

“SBM will continue with FEED, while we continue appraisal drilling to further delineate the opportunity and work towards a future sanctioning decision.”

The concept selection comes after a lengthy — and ongoing — process of evaluating the Shenandoah discovery, as well as possible development scenarios for the complex Lower Tertiary field.

Netherlands-based SBM, which will be moving forward with front-end engineering and design work, beat out rival Technip for the hull FEED prize.

The French engineering giant had proposed a spar-based concept for Shenandoah. The two contractors had been working on “competing FEEDs” for Anadarko, which has historically favoured spars for its major developments in the US Gulf.

Houston-based Wood Group Mustang is understood to be handling FEED work for the facility’s topsides, regardless of the hull concept, while Wood Group Kenny is working the subsea component, sources said.

The operator is not expected to take a final investment decision at Shenandoah until after it evaluates results of its fifth appraisal well, scheduled to spud in the fourth quarter of this year.

Assuming it goes ahead with the project, the SBM facility would be Anadarko’s first semisub-based development in the US Gulf since Independence Hub, which came online in 2007. That facility is no longer producing after its last well watered out late last year.

In the US Gulf, Anadarko currently operates seven spars and one tension-leg platform, not including the facilities associated with the company’s proposed $2 billion acquisition of Freeport-McMoRan’s portfolio in the region.

Anadarko had originally been expected to make a concept selection for Shenandoah as early as last October, but it continued to weigh up its options for another year. The operator was said to be debating internally about a possible dry-tree development, which would have required a spar as the centrepiece.

The Texas-based company eventually ruled out the dry tree approach, a decision that put a semisub back in contention.

In recent months, according to sources, SBM tweaked its design, adding additional well slots to its proposed facility beyond the 14 previously sketched out.

That suggests Anadarko may have decided to go with a single larger facility, rather than the potential “multiple” smaller floaters the company has previously discussed publicly.

Sources have suggested the Shenandoah semisub could serve as a potential “hub” for other discoveries in the area, an idea in line with Anadarko’s stated strategy of relying on tie-backs to improve project economics in the deep-water US Gulf.

Anadarko did not elaborate on its reasoning for the decision. But asked to speculate why the company might have gone the semisub route, industry sources cited easier interconnectivity and hook-up for tiebacks as one potential factor, including more deck space for different topsides modules.

However, another factor mentioned was the risk and difficulty of tricky lifts in the offshore integrations required by spars, especially as topsides weights increase with larger and more complex facilities.

Anadarko discovered Shenandoah in 2009 and proved it up with a successful appraisal well in 2013. It has continued to appraise the field, with varying degrees of success.

Its most recent well, Shenandoah 5, was drilled as a “keeper”, according to sources, indicating it may be utilised as a future production well.

The well, which did not encounter the field’s oil-water contact, was drilled into the heart of the reservoir and “extend(ed) the field further east”, Anadarko has said.

A primary objective of the upcoming appraisal, Shenandoah 6, will be to establish the oil-water contact on the eastern flank of the field and “quantify the full resource potential”, Anadarko has said.

It is not known how big Shenandoah’s resource is. Anadarko reckons nearby operated discoveries like Coronado and Yucatan will contribute to the ultimate recoverable resource of the Shenandoah “mini-basin”.

Observers have suggested that could mean as much as 1 billion barrels of oil in total.

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