Today, you can travel the world over and
find U.S. independents putting wells down in darned near every hydrocarbon
province, right alongside their big brethren.
Nimble on their feet and armed with all the latest
industry technology, even the smallest companies are staking claims
in places that were long the exclusive playground of the majors
for the most part, e.g., Russia, the deepwater Gulf of Mexico (GOM),
the North Sea, etc. -- and doing quite well, thank you.
For example, take ATP Oil & Gas, which operates
wholly offshore.
Since its inception in 1991, the company has steadily
built a track record for successful project development and operational
prowess in the GOM in water depths as great as 1,360 feet, using
the latest 'n' greatest tools from the available industry toolbox.
In fact, it is widely recognized for its expertise using subsea
technology, according to Paul Bulmahn, chairman and president of
ATP.
Recently, opportunity knocked from far away when
the British government came calling to seek ATP's involvement in
select projects in the North Sea.
Since that contact occurred, the company has secured
properties having approximately 81 Bcfe proved reserves in the Southern
Gas Basin of the North Sea. This is an area protected by Great Britain
and the continent, having water depths between 50 and 190 feet with
infrastructure already in place -- not so different from ATP's GOM
home base.
The company's first North Sea project is under development,
with production anticipated to commence in 2003.
ATP's foray into this region is all part of a very
focused strategy of this company that shuns exploration in favor
of another approach that historically has served it well.
"We take on PUDs (proved undeveloped reserves) and
develop them," Bulmahn said, "so an area must have proved reserves
or we're not interested.
"The more than 300 projects the British government
has identified that fit into our niche are properties that were
drilled by exploration companies which have identified proved reserves,"
he said, " that the explorationists elected not to develop for whatever
reason. We're simply moving our business strategy from a place we
already know well to one with similar operating characteristics."
Other similarities exist between the two regions,
including some aspects of the regulatory arena.
"The laws, rules and regulations are different,"
Bulmahn said, "but there's a willingness to work with independents
in both locales.
"Here (in the U.S.), the MMS is one of the government
agencies most understanding to the industry's needs," he said, "and
the Department of Trade and Industry in the U.K. certainly is as
well.
"Some talented people in the U.K. left industry to
join the department," Bulmahn noted, "and they have a practical
understanding of the industry and its problems."
Money Talks
Still, there are headache-inducing obstacles to surmount.
Not surprisingly, money ranks right up there on the
list.
Whether we're talking the GOM or the North Sea, anything
in the offshore requires serious capital to get the job done. But
that magnitude of capital is becoming ever more difficult to acquire
because some of the mezzanine lenders to the oil and gas folks have
flat out disappeared, e.g., Enron Capital, while others are scaling
back, and the new entrants needed are not yet forthcoming, according
to Bulmahn.
To enable the independent companies increasingly
to participate along with the majors in these hydrocarbon-rich regions,
he said it's crucial to persuade the investment community in the
GOM and North Sea that the independents are stronger than ever because
of the advanced technology they're able to employ.
Capital requirements loom particularly large for
North Sea activity, Bulmahn said, because project costs tend to
be greater -- even office space is pricier.
Still, he offers a compelling reason to reach out
beyond that time-tested workhorse: the GOM.
"In our niche in the North Sea, larger reservoirs
have been left behind than in the Gulf of Mexico as non-strategic
by the majors who drilled them, so we can justify our efforts to
bring them to production.
"The majors need a higher return than the independents
because of the greater overhead base they need to cover," Bulmahn
continued, "so obviously, I'm willing to accept a smaller return
than they are to make the production happen."