Resources Lurking in the Deep

Cancun Session Looks at Where, How

For 10 years deepwater has been the global exploration mantra, for good reason.

Scores of massive fields have been uncovered from primarily three main regions — the Gulf of Mexico, offshore Brazil and offshore Angola and Nigeria in West Africa.

However, as with any oil or gas province, maturity is a fact of life — which begs the questions:

How much deepwater potential remains, and where will the big new discoveries come from?

The answer, according to experts who will be sharing their information during the AAPG International Conference and Exhibition in Cancun, Mexico, is — a lot.

"A very significant resource base remains to be found, perhaps as much as what has already been discovered," said Chandler Wilhelm, who is co-chairing a session in Cancun on global deepwater operations and potential.

But what is left behind will present new challenges, Wilhelm believes, and often involve different plays than what industry already has harvested.

"Some of these plays are unproven, so we still have much to learn about the deepwater," he said.

Please log in to read the full article

For 10 years deepwater has been the global exploration mantra, for good reason.

Scores of massive fields have been uncovered from primarily three main regions — the Gulf of Mexico, offshore Brazil and offshore Angola and Nigeria in West Africa.

However, as with any oil or gas province, maturity is a fact of life — which begs the questions:

How much deepwater potential remains, and where will the big new discoveries come from?

The answer, according to experts who will be sharing their information during the AAPG International Conference and Exhibition in Cancun, Mexico, is — a lot.

"A very significant resource base remains to be found, perhaps as much as what has already been discovered," said Chandler Wilhelm, who is co-chairing a session in Cancun on global deepwater operations and potential.

But what is left behind will present new challenges, Wilhelm believes, and often involve different plays than what industry already has harvested.

"Some of these plays are unproven, so we still have much to learn about the deepwater," he said.

Wilhelm is manager of exploration-new business development (America's region) for Shell Oil. His co-chair is Adan E. Oviedo-Perez with Pemex.

Of course, there are challenges — not only in discovering new volumes, but also in commercializing deepwater resources that already have been found.

"Low cost development solutions, stranded gas solutions, effective appraisal and shortening the time from discovery to market are all keys to commercializing the existing undeveloped deepwater reserves," Wilhelm warned.

Gas Problems

These are no small challenges. While a large discovered but undeveloped resource base remains to be commercialized, the costs associated with that effort are equally large.

"The money involved and staff requirements to take discovered volumes, get them appraised, identify the optimal development solution and reach development sanction usually exceeds what it takes to actually find the discovery," Wilhelm said.

Another key for future deepwater exploration and development is natural gas solutions.

"The biggest impediment for economically developing oil in frontier deepwater settings is associated gas," he said. "Most companies have policies forbidding flaring gas, but most countries do not have well developed gas markets, so any gas typically is reinjected — a costly affair."

Technologies and markets eventually will be developed that will allow companies to actively explore for natural gas in deepwater settings — perhaps globalization of LNG or expanding local gas markets, according to Wilhelm.

"That will mean a second wave of exploration in deepwater regions," he said. "There is plenty of stranded gas in the world today that must be developed first, but at some point in the future tremendous natural gas resources from deepwater settings will become economically profitable and be an important worldwide resource."

New Opportunities

While the Gulf of Mexico, Brazil and offshore West Africa will continue to be the deepwater exploration focus for the near term, Wilhelm indicated there are many smaller opportunities in other regions that could be attractive.

"Certainly, companies look for the combination of favorable geologic factors supported by attractive economic parameters," he said. "In general, companies have been most successful exploring in Tertiary deltaic systems on mobile substrates that provide a multiplicity of traps, an active and robust petroleum system, reservoirs that can deliver the high rate … wells need for commerciality, and play longevity to realize sustained returns from the initial investment stream.

"Some new plays also are emerging that target older Mesozoic," he added, "but deepwater basins are not uniformly prospective. Finding sweetspots with the right combination of factors can yield very attractive financial returns. Just being in the neighborhood is not good enough — and is a recipe for value destruction."

A region must have enough density and reproducibility of drill sites to allow for economic development in deep water, according to Wilhelm.

"It's not the first infrastructure hub that makes the most money. The key is the potential that first hub unlocks — that's why Tertiary deltas tend to be areas where a lot of value is created. After the infrastructure hub is established there are multiple opportunities for satellite fields, infield drilling and field optimization. In some cases the bulk of the value is created through infield drilling, facilities upgrades, and tying back near field opportunities."

Wilhelm said virtually every potential deepwater margin in the world will see some licensing round or some industry interest. However, this activity will be limited by the availability of spec seismic data, which is a key enabler for exploration activity.

Underexplored deepwater provinces include both sides of the North Atlantic, parts of the Caribbean, part of Southeast Asia (Indonesia and China) and even the Mediterranean rim.

"However, there are some places where industry has already bent its pick that likely won't attract additional investment," he added.

Geology Matters Most

Current oil prices are not all that meaningful for deepwater projects that can take years to bring to fruition, but Wilhelm said strong commodity prices over a prolonged period of time could generate activity in what would otherwise be marginal ventures or in difficult operating conditions.

Recent examples of high signature bonuses in places such as Sao Tome, he said, suggest that this bullish view may be influencing some companies.

From a water depth standpoint, Wilhelm said the ultimate limitation will be geological, not technological.

"I think as you move into ultra deep settings, onto oceanic crust and away from continental margins and their clastic delivery systems, you will eventually run into questions about adequacy of the petroleum system and the whole model of Tertiary deltas on mobile substrates," he said. "There won't be enough structure, there won't be an active petroleum system.

"Reservoirs tend to go out about as far as you can get, so we rarely see plays where reservoir limitations are the constraining factor," he continued. "Modern seismic of modern-day abyssal plains show channels going far past their underlying geologic prospectively.

"So, it is fundamentally about the petroleum system."

auwfsceuuxetssfcbczvzwvuqxrbc

You may also be interested in ...