BP and Shell’s Mars Field – a monster oil find and $1 billion development

An interesting insight into one of the world’s largest and expensive drilling rigs in the Gulf of Mexico, Mars, which shows the opportunity, dangers and cost of deep water drilling in areas such as the Gulf, Brazil, the Falklands and Greenland.

The Mars field was discovered  in 1989 using the drillship, Discoverer Seven Seas. Data from four other wells, six sidetrack wells and 3D seismic work were used to make a decision to go ahead with field production.

The field is located in the Gulf of Mexico about 130 miles south-east of New Orleans. Mars was the largest Gulf of Mexico discovery in over 25 years. Its daily production averages about 21,000 barrels of oil and 25 million square feet of natural gas.

Shell Deepwater Production is the field’s operator and has a 71.5% interest. The remaining 28.5% interest is held by BP.

Shell announced in October 1993 its plans to develop Mars utilizing a tension leg platform (TLP).

The TLP was installed in May 1996 in a water depth of over half a mile, which borke the record set by Shell’s Auger TLP – which was installed in 2,860 feet of water in 1993.

The Mars Tension Leg platform is 990 meters high, nine times the height of St Paul’s Cathedral and weighs 36,500 tons. It is designed to withstand hurricane force waves of 21 metre (71 feet) and winds of 140 mph.

The initial development was designed to recover about 500 million barrels of oil equivalent and cost $1 billion. Out of the total project cost 55% was dedicated to the fabrication and installation of the hull, deck facilities and pipelines. The remaining 45% was spent on drilling and completing the wells.

Mars has produced more than 700 million barrels to date with daily production of between 120,000 and 240,000 barrels a day.

In September 2010, Shell announced plans to add a second TLP, Mars B Olympus, about 130 miles south of New Orleans. The new platform will extract production from eight Mississippi Canyon blocks: 762, 763, 764, 805, 806, 807, 850 and 851. Mars B, is being readied to team with Mars A to provide a combined 48 well slots and over 350,000 BOEPD processing facilities to optimize recovery from the Mars field beyond 2050. The platform is expected to be operational in 2015.

In 2005, the Mars Platform was severely damaged by Hurricane Katrina. The platform was in Katrina’s eye for about four hours, with 80-foot waves and wind gusts over 200 mph.  The Mars TLP floating structure and wells survived but the platform drilling rig and some major elements of the topsides production equipment were heavily damaged.

It took three months of preparation and planning to successfully lift and remove the damaged Mars platform rig in two pieces and repair the oil and gas pipelines 3,000 feet below the water’s surface, repairing the platform involved a workforce of 500 people and represented more than one million man-hours.  

Contrarian Investor UK