HOUSTON, Dec. 6, 2013 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) announced today the reference yields, Total Consideration and Tender Offer Consideration for each series of notes subject to its previously...
HOUSTON, Dec. 6, 2013 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) announced today that, pursuant to its previously announced $850 million cash tender offer, approximately $2.7 billion in aggregate principal...
Explore Newsletter: Vol. 1, No. 1
Activity is high when the pressure’s low
|Hurricane Katrina makes landfall in August of 2005.||This onshore wellsite suffered flooding from Katrina.|
Every year around June 1, workers and residents on the U.S. Gulf Coast begin to pay even closer attention to the weather forecast. It’s not just because schools are out, vacations are planned, or summer sports are in full swing. The sunshine also warms the waters of the Gulf of Mexico. When mixed with low-pressure weather systems from the Atlantic, the combination can create massive, devastating tropical storms, floods and hurricanes that impact the oil and gas industry across hundreds of miles from South Texas to Alabama.
Despite these foul storms, the Gulf of Mexico (GOM) and Gulf Coast regions remain a premier basin for oil and gas developments. For Apache, these regions provide their own unique portfolio of opportunities in a variety of small- to large-sized prospects with moderate- to higher-risk profiles. Strong cash flows and prolific wells — the big picture in the Gulf of Mexico is enticing, and when bad weather comes, the company is prepared for it.
GOM SHELF INDEX
TOTAL MILES FLOWN
According to transportation manager Tim Kelly and coordinators Bob Moore and Stewart Soirez, on any given day in the Gulf of Mexico Shelf, Apache has up to 2,000 production employees working offshore. Logistically, the company is moving 1,000 passengers, operating 70 marine vessels, 28 helicopters, and two search-air-rescue aircraft every day. On a routine basis, the company changes offshore crews every week, requiring constant coordination and communication with shorebases, boats, helicopters and other Apache employees. This only intensifies with a hurricane.
“Hurricane evacuation is coordinated through each of the work groups – construction, plugging and abandonment, drilling, and production,” Kelly said. “We move the non-essential, expense projects and lift boats first; then we decrease the number of people working offshore as the storm moves in; finally evacuating 100 percent of staff from the potentially affected area.”
Redeployment is often the larger, more complex issue. There’s an urgency to get back offshore, inspect the facilities, and put production back online. “We focus on submerged debris, loose grating on facilities, open holes and structural and stability issues,” Moore said. With the approval from regulators, operations resume.
Apache’s Gulf of Mexico team members have an added high-tech resource in their toolbox for hurricane preparedness. An iPhone application called “hurricane watch” provides real-time data on tropical waves, depressions, barometric pressures and other weather information.
“We monitor the weather more closely during hurricane season, taking a more conservative approach to operations,” said Doug MacAfee, manager of drilling for the Gulf of Mexico Shelf Region. He noted that additional planning considerations begin in June, with the advent of hurricane season. As storms form in the Gulf and move toward Apache operations, logistics planning ratchets up accordingly. The impact to operations begins when wind speeds approach 30 miles per hour; then storm preparation procedures kick in. For drilling, this can include temporarily plugging a well, in which special tools known as storm packers are inserted into the well to maintain the safety and environmental integrity of the wellbore in even the worst weather conditions. These procedures also enable drilling operations to resume quickly and efficiently once calmer weather returns.
With the acquisition of Mariner Energy and Devon Energy shelf assets last year, the number of Apache-operated production platforms in the Gulf of Mexico increased more than 75 percent, to approximately 750 facilities. Nearly 150 of those are fully manned – 24 hours a day, seven days a week.
The Gulf of Mexico regions have developed a four-phase plan to hurricane preparedness that begins with general precautions and runs through full-scale evacuations. The plan is scalable, adjusting for the company’s larger presence in the past year.
“As we’ve grown we’ve added resources, but if we have to, we can still manage a full evacuation within 24 hours,” said Shannon Savoy, district manager for the Gulf Shelf.
Savoy explained that oil production platforms are fully shutdown during an evacuation. However, because there is not the same risk of a spill with natural gas production, these facilities can maintain operation even when personnel exit the platform. Wireless control systems are used to monitor equipment from offices onshore, and if the storm is forecast to impact a particular area, the wells there can be shut-in remotely.
Savoy noted that the potential impact onshore also can accelerate activity offshore. “Helicopter companies and parishes have started evacuations much earlier than in the past,” he said. “We’re also at the mercy of pipeline companies and other producers, so if they shut in their facilities, then we, too, must shut in. We also give priority to employees who might be impacted by a storm’s landfall. We’ll ask, ‘Do you need to get home? Do you have someone taking care of your family and property?’ We’ll work to accommodate the needs of every employee and contractor.”
With operations in habitats that vary from hot and dusty South Texas plains, woods and marshes in South Louisiana and Mississippi, and inland state waters along the coast, the Gulf Coast Onshore Region deals with a wide variety of weather challenges. In the past 12 months alone there were freezing issues in winter, flooding in the spring and the annual threat of hurricane season each summer and fall.
Although the regional weather is generally benign, cold temperatures can cause major disruptions to Apache’s operations. “Cold temperatures and high humidity can cause freezing issues,” said Bill Billman, production manager for the Gulf Coast Onshore Region. “We don’t typically heat our facilities, so during abnormal cold spells, our production infrastructure can have freezing problems that cause disruptions to our operations for a short period of time.”
Billman noted that the spring floods this year didn’t cause widespread disruptions to production, but it did impact the ability to travel to and from facilities for well maintenance and other activities.
“We had to close an airbase and relocate 500 vehicles and associated personnel because of the potential flooding,” Soirez said. “Then, two weeks later we reversed the process.”
“We monitor the weather closely during hurricane season and make evacuation decisions based on the various computer model projections and the time required to secure the well,” said Steve Hopkins, drilling manager for Gulf Coast Onshore. “On our water locations during the hurricane season, we always have storm packers on board. If the expected storm surge is significant and we have adequate time, we also will dismantle our shore base. With the storm surge and related flooding, you have to wait until the water subsides, then you can resume drilling operations.”
That’s when you’re more likely to find snakes, alligators or other uninvited guests at your facilities. Kelly recalls seeing a front-end loader removing a huge snapping turtle at the shore base in Venice following a smaller storm some years ago.
Hurricanes pose a different set of problems for the onshore team. With the unpredictability of the storm’s path and operations in the middle of marshland, hauling out a rig would take too long. Instead, the team lays down the derrick and removes non-essential and more mobile equipment.
“Many operators choose not to drill wells during the peak months of hurricane season,” Hopkins said. “But we view it as an opportunity to keep rigs working and negotiate a much more favorable contract with better commercial terms and day rates.”