The Gulf of Mexico, a paradise for exploration.
Maybe it’s the subsalt plays that muddle seismic imaging and befuddle geophysicists.
Or the constant threat of hurricanes in the summer.
Or maybe it’s the escalating production costs and brutal offshore environment.
Or the astronomical day rates for offshore drilling rigs – and sometimes no rigs available at all.
You just couldn’t ask for better, and that’s why the Gulf of Mexico has become one of the hottest deepwater play areas in the world.
Right now, a record 15 rigs are drilling in Gulf waters 5,000 feet or deeper, according to the U.S. Minerals Management Service (MMS). The agency calls water depths of 1,000-5,000 feet “deepwater” and over 5,000 feet “ultra-deepwater.”
Those 15 ultra-deepwater attempts involve nine operators – ExxonMobil, Hydro Gulf of Mexico, Shell Offshore, Chevron USA, BP Exploration & Production, Devon Energy, BHP Billiton Petroleum, Woodside Energy and Anadarko/Kerr-McGee Oil & Gas.
Water depths range up to 8,694 feet, for a well drilling on ExxonMobil’s Brontosaurus North prospect in Alaminos Canyon block 731.
Two favorable developments account for at least some of the Gulf’s deepwater popularity, said David Cooke , an AAPG member and MMS deputy regional supervisor, Resource Evaluation Office.
“The infrastructure that has developed in the Gulf of Mexico has been pushed out into the deepwater, and now the ultra-deepwater,” he noted.
Also, the potential that’s indicated by recent exploration and development success also lures companies to the Gulf, Cooke said.
MMS staff finds that optimism in the presentations operators make before drilling in the Gulf deepwater and ultra-deepwater, according to Mike Prendergast , MMS section chief, Reserve Section.
“Often times you see for the Miocene and Lower Tertiary a pre-drill estimate in the range of 200 million to 500 million (barrels of oil) equivalent ” for an exploration structure, he said.
The Gulf’s promise of attractive remaining reserves is definitely a major exploration factor, said Øivind Reinertsen, senior vice president of Statoil’s Gulf of Mexico assets in Houston.
But just as important for a deepwater province, “it’s one of the few places still available to oil companies around the world,” he observed.
A government estimate puts undiscovered, U.S.-waters Gulf of Mexico resources at 50 billion recoverable barrels of oil equivalent.
Oil production from the Gulf is projected to exceed 1.7 million barrels of oil per day (bo/d) within the next 10 years. If currently announced discoveries and undiscovered resources reach their full potential, production could hit 2.1 million bo/d, the MMS has said.
Already hot for deepwater players, the Gulf turned sizzling a year ago when Chevron announced production test results for its Jack #2 well in Walker Ridge block 758.
Tapping about 40 percent of the well’s net pay in the Lower Tertiary trend, the test showed a sustained flow rate of more than 6,000 bo/d.
Not that many years ago, it was “a wild dream of a few explorationists that the Lower Tertiary even existed below the salt,” Cooke observed.
“The first drilling that penetrated through the Tertiary suggested oil, and as they’ve drilled and found where the sweet spots are, they’re finding oil with very little associated gas,” Prendergast said.
“The regional geologists have been able to go in and get an idea of the regional geology and what the depositional environments of the Lower Tertiary were,” he added.
In fact, Upper Paleocene-Lower Eocene targets have attracted both attention and discovery success during the past five years.
The deepwater/ultra-deepwater Wilcox trend play could cover more than 30,000 square miles of the Gulf, with target well depths from 12,000 feet all the way to 35,000 feet, in water depths up to 10,000 feet.
Salt canopies that can be an astonishing 10,000-20,000 feet thick cover about 90 percent of the play.
Advances in seismic acquisition and processing that improve imaging below the salt, the success of the Jack test and the emergence of the Lower Tertiary prospects all have contributed to the current Gulf drilling boom.
New plays could develop in the Upper Cretaceous, Middle and Upper Eocene and Oligocene submarine fans and the Triassic-Middle Jurassic synrift section.
Meeting the Challenges
A few questions remain, however.
“One of the issues out there in the Lower Tertiary, according to some of the presentations, seems to be the rock quality,” Prendergast said.
Another problem may be a fairly rapid decline in production, already reported in some other deepwater Gulf wells.
“If basically you produce faster than the ability to backfill into the space that’s being voided,” Prendergast said, “you get fall-off.”
Compartmentalization may be a factor, but it will take another generation of seismic acquisition and processing before that can be reliably imaged, Cooke said.
“The bigger issue out here (in the ultra-deepwater) is the total depths of the wells and that you will see high pressure,” he noted.
Day rates for rigs capable of drilling in the Gulf’s ultra-deepwater soared during 2006, passing $500,000 per day. There’s no doubt drilling would be even more intense if rigs were readily available and more economic.
“More than half the rigs out there are doing evaluation or development work, but we expect that situation to improve over the next three years,” Prendergast said.
MMS counts five new drillships, six new semi-submersibles and three upgraded semis coming into the Gulf of Mexico between 2008 and 2010.
The drill structures include a new cylinder-shaped floater from Sevan Marine that can be used as a floating production, storage and offloading (FPSO) vessel or as a drilling platform.
Petrobras awarded a six-year contract for the “Sevan Driller” FPSO for work in the Gulf, beginning in 2009. It will have a 40,000-foot drilling capacity in water depths up to 12,500 feet.
“Supposedly this new circular-type FPSO can be built in more shipyards around the world,” Prendergast said. “We expect to see more FPSOs and new types of FPSOs (coming into the Gulf), but also some spars.”
The Gulf may see more phased-in production projects that can be adjusted to varying demands, and more types of production facilities.
For its Chinook Cascade field development, Petrobras has ordered an FPSO to be installed in 2,600 feet of water. The project will include a disconnectable Submerged Turret Production (STP) buoy from Norway’s APL.
If disconnected from the FPSO in hurricane conditions, the STP buoy will float beneath the water surface and later can be re-locked to the vessel.
Heavy seas at the surface won’t be the only problem to affect operators in the ultra-deepwater, according to Prendergast.
“They are looking at the bottom currents in the sea column – some come up from the Yucatan,” he said. “That’s an issue in both exploration and production drilling.”