Hess in the Media: Stampede stays astride in turbulent times
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Hess in the Media: Stampede stays astride in turbulent times

  • Stampede

Operator Hess and partners celebrate success of challenging project in US Gulf deep-water

By Kathrine Schmidt
Upstream

In 2014, Hess had laid out a strong business case for the Stampede development in the deep-water US Gulf of Mexico, having budgeted $6.2 billion for the tension-leg platform project and was preparing to go full speed ahead.

But just months later, the oil price tumbled amid the US shale oil drive and forced the offshore sector to rework its business model.

Other companies pressed pause and headed back to the drawing board to rework their developments from top to bottom.

But Hess credits its ability to stick to its plan amid the change as crucial to its ultimate execution of the project, according to Gerbert Schoonman, Hess vice president for global production offshore.

Stampede came in at an estimated $5.4 billion, $800 million under budget, and achieved first oil six months ahead of schedule.

More than 4500 workers in total were involved, with 14 million man-hours, with a strong safety record.

“We’ve been able to build this in the downturn of the industry, and we’re able to bring it on stream when it looks like the commodity prices are starting to recover. That’s typically not such a bad situation to be in,” says Schoonman.

“It’s a large resource, there’s a lot of hydrocarbons there, and we believe that Stampede will be a long-term cash-generating engine.”

Operations update

Stampede started operations on 25 January with three wells already drilled.

That achievement came from the "blood, sweat and tears" from both Hess employees and contractors, topsides construction manager JC Surber says in a company video detailing the project.

Everyone on the team was "playing their part to get us to this moment — it's a significant milestone", says Surber.

Additional wells are under way with the Diamond drillships Ocean BlackLion and Ocean BlackRhino, with three remaining producers and one injector left to go, and ramp-up expected to continue through 2019. Commissioning work is still ongoing for some parts of the facility, such as the gas compression and water injection systems.

The facility has capacity for 80,000 barrels per day of oil and 40 million cubic feet per day of natural gas, as well as 100,000 bpd of water injection.

Stampede lies 115 miles (185 kilometres) off Port Fourchon, Louisiana, and covers Green Canyon blocks 468, 511 and 512, in water depths of about 3500 feet. Hess was chosen as operator in an operating agreement finalised with partners Chevron, Statoil and Nexen (now owned by CNOOC Limited) near the end of 2012, with front-end engineering starting in 2013.

The size of the field meant more than one drill centre was needed, and the water depth was a bit shallow for a semi-submersible — the movement profile of such a facility would call for heavier and more complex risers. That left a spar design or TLP. The possibility for quayside integration — avoiding tricky offshore topsides lifts — was one point in favour of the TLP.

Hess also wanted plenty of real estate on the platform for basic operations as well as future expansion, with room for topsides modules such as gas lift capability and the integration of additional risers.Gerbert Schoonman

The company had previously used a proprietary TLP design for its Okume and Oveng fields off Equatorial Guinea, but saw a classic model as sufficient. The engineering, procurement and construction management for the TLP and mooring went to Modec International, which also managed hull construction at Samsung Heavy Industries in South Korea.

Hess also resisted the temptation to rework its facility design, even after the oil price crash.

"We were very clear about scope, what we wanted to see built, and we didn't deviate from that," Schoonman says. "That lack of deviation in change management has helped us in achieving the cost reductions that we did." Late changes can seem like an improvement, but do not always actually pan out that way, he indicates.

Looking ahead

Production ramp-up is expected to move slowly for Stampede. Based on past experience, US Gulf Miocene wells perform best when production is increased slowly, according to Hess officials.

Output from the facility is seen as crucial for the company's near-term growth strategy, aiming toward 10,000 barrels of oil equivalent per day net in 2018 and further in 2019.

Schoonman says the US Gulf is one of Hess's “cash engines".

"We think Stampede will become one of the valuable cash generators for Hess, so that it subsequently funds other opportunities. In the near term that is probably going to be funding Bakken and Guyana,” he adds.

While Hess has not released a breakeven figure for Stampede, its strategy has been to move its projects down the cost curve to be cash-generative at a $50 Brent oil price, a goal Schoonman sees as "perfectly possible" in the US Gulf.

Hess is also committed to scoping more opportunities at its existing US Gulf hubs, the Baldpate compliant tower and Gulfstar 1 spar at the Tubular Bells field.

On its agenda at present is the tie-in of the Penn State Deep 6 well to Baldpate, and it is considering near-term field opportunities for Tubular Bells, including workovers.

As a whole, the region is expected to help Hess meet its production targets of 265,000 to 275,000 bpd by the end of 2018, compared to its first-quarter range of 220,000 to 225,000 bpd.

However, even with execution on its latest project wrapping up, Hess sees potential for future standalone facilities in the region, saying its exploration department is still picking up licences that could be prospective for the next big discovery.

“We definitely have the aspiration to develop another hub in the Gulf of Mexico,” Schoonman says. “But that’s a little further out.”

Reprinted with permission.

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