How LLOG reached the finish line for its key deepwater project

In the spring of 2022, executives with LLOG Exploration were sprinting toward a self-imposed deadline. The private US operator was targeting 29 April of that year for a banner project: Salamanca, a soon-to-be refurbished floating production unit for a pair of US Gulf fields, Leon and Castile.

Recounting the experience to Upstream in a recent interview, LLOG chief executive Philip LeJeune describes it as “maybe the hardest transaction that I can recall going through in my career” because of the project’s many moving parts: two fields with differing ownership structures, oil prices that had swung wildly the previous two years, and something of a novelty for LLOG in the restored FPU, formerly known as the Independence Hub.

Some finance executives worked 120 hours a week for a month as the finish line drew near, according to LeJeune.

“If you do the math on how much time that leaves to eat and sleep and commute, it's not much,” LeJeune told Upstream. “We had one of our finance guys taking calls in the middle of the night outside so they could stay awake and alert.”

Located in the US Gulf’s Keathley Canyon region, about 200 miles (322 kilometres) from the Louisiana coast, Salamanca will have a capacity of 60,000 barrels per day of oil and 40 million cubic feet (1.13 million cubic metres) per day of natural gas, according to LLOG.

Ahead of the latest announcement, LLOG gave Upstream an exclusive insight into how the renovation project came to be — and what it means for the company’s deepwater strategy moving forward.

Entering Keathley Canyon

LLOG’s roots in Salamanca were planted about a decade ago, when the company undertook its first foray into Keathley Canyon with its Buckskin project.

Buckskin was the “the first domino to fall in our Keathley Canyon strategy”, said LLOG chief operating officer Eric Zimmermann. He noted the company was primarily a Miocene player in Mississippi Canyon and Green Canyon before reaching into the Wilcox trend via Keathley Canyon.

After the Repsol swap, LLOG drilled a delineation well for Leon in 2019. Less than a year later, the Covid-19 pandemic hit, forcing LLOG to rethink its development plans.

At only 20 miles (32 kilometres) apart, LLOG knew neither Leon nor Castile were big enough to have separate hubs. However, LLOG had experience with a “hub and spoke model”, as Zimmermann put it, from its Delta House project, which tied multiple fields into one hub.

Sometime during 2021, with spot oil prices as low as $52 per barrel, LLOG stumbled upon the idea of refurbishing an existing hub instead of building a new one in order to trim costs.

It found an option in the Independence Hub, a gas-oriented platform that had been in use in the eastern US Gulf for less than a decade.

“If we are going to reuse and refurb, this one is probably the best candidate that there will be in the world,” Zimmermann said.

Remodelling the hub

LLOG executives likened the Salamanca project to a house renovation: The prospect is exciting, until the dirty work begins and surprises pop out.

For example, inspections revealed “new challenges” like piping and instrumentation diagrams (P&IDs) that didn’t fully match the hub, as well as contamination in the hull, said Jon Wood, LLOG’s vice president of deepwater projects.

“There was a litany of issues, just like when you're opening up the walls in your house,” Wood said.

Though cost savings were found, the refurbishment was “more complicated than building from scratch”, Zimmermann said. The first six to nine months involved “deconstruction, inspection and identification”.

“And then we had to do the build,” he said.

The hub’s hull is intact but needed a “tremendous amount of inspection to get us into modern compliance”, Zimmermann said. The topsides were “basically wiped clean” through new rotating and production equipment.

Seatrium revamped the hull at its yard in Brownsville, Texas, while Kiewit performed topsides construction and topsides-hull integration.

The project had a larger subsea scope before Covid-19 forced cost reductions, Wood said. As a result, Castile will start with a single flowline, but it has the flexibility to add lines as more wells begin producing.

LLOG knew secondary recovery would be important for Salamanca, so engineers and designers crafted the FPU’s subsea pumping and boosting capabilities, which would create a “fairly large demand” for power generation, Wood said.

Additionally, the footprint of the Independence Hub's deck was bigger than the decks used for two of its other operated floating hubs in the US Gulf, Who Dat and Delta House.

“It provided us an opportunity to kind of use existing infrastructure and then still have it be bespoke to the design that we need to process the fluid,” Wood said.

US Gulf strategy

When asked about the company’s broader US Gulf plans, Zimmermann said LLOG is “opportunity driven” and tries to be “agnostic” on specific kinds of projects.

“If there's a chance to jump in on some discoveries that were made that another operator didn't see value in, where we can bring value in development, then we're going to jump on that,” he said.

However, LLOG executives did say they would pursue an FPU refurbishment again if the price was right.

“Having been through it, I think our team is now that much more acutely aware of some of the pitfalls and how to manage those,” Zimmermann said.

LLOG has an ambitious drilling programme planned through the end of 2026, according to a company presentation. In that time, it plans to drill eight to 10 wells, complete seven to nine wells, and bring six wells online from three fields — Leon, Castile and Buckskin Phase B.

The drilling will include “a couple of exploration wells” in 2026, Zimmermann said. LLOG declined to reveal other specifics about the wells.

Lessons from Salamanca should help LLOG unlock additional prospects in the US Gulf, Wood said.

“That's where the opportunities are, right?” he said. “We have to drill deeper. We have to do higher pressure stuff.”