Vision Led to Crazy Horse Find

Move from Time to Depth Imaging 'Critical'

By 1995, after nearly 10 years of exploration, the deepwater Gulf of Mexico had left its status as a frontier play behind, and many industry watchers believed all the giant discoveries had been made.

Major international oil companies hunt for elephants, and in the Gulf those big beasts were apparently becoming increasingly elusive.

But at least one company rejected the status quo and conventional wisdom — and through sound science and new ideas made the largest Gulf of Mexico deepwater discovery in 1999 at Crazy Horse (now known as "Thunder Horse" … see sidebar, left).

This is a story about that story.


BP made its entry in the deepwater Gulf of Mexico in 1988 on the heels of its merger with Sohio. By that time much of the prospective acreage had been leased up by a couple of major players, so BP found its niche as a partner in projects with other companies.

"That effort was actually quite successful," said David Rainey, exploration manager for BP in the deepwater Gulf of Mexico, adding that from 1988 to the early 1990s the company had several successes, such as Mars and Ursa, in partnership with Shell.

"We were certainly riding Shell's coattails at that point," he said, "but those successes did allow us to predict a production stream that would grow to about 150,000 barrels per day from essentially nothing."

Based on those initial results, BP in 1995 was predicting that through continued exploration success the firm could grow its production stream to around 200,000 barrels a day by 2009-2010, and then production would likely decline.

The company's scientists, however, began wondering if that's the best they could hope for — or if there was something more they could aspire to.

"At that time we began a far-reaching study on the deepwater Gulf of Mexico," Rainey said, "and one of the things we did was look more closely at the evolution of the shelf."

History told them that companies first got their feet wet in the Gulf at the end of World War II, and production grew slowly through the 1940s and '50s. By the 1960s production accelerated and hit three million barrels of oil equivalent a day in 1972.

"The shelf continued delivering at that rate for the next 30 years, which is quite a remarkable feat," Rainey said, "and yet here we were looking for our own production stream to go into decline in just 10 to 15 years.

Image Caption

On its way to exploration glory: The Ocean Confidence drilling platform is positioned for its work at Thunder Horse.
Photo courtesy of BP

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By 1995, after nearly 10 years of exploration, the deepwater Gulf of Mexico had left its status as a frontier play behind, and many industry watchers believed all the giant discoveries had been made.

Major international oil companies hunt for elephants, and in the Gulf those big beasts were apparently becoming increasingly elusive.

But at least one company rejected the status quo and conventional wisdom — and through sound science and new ideas made the largest Gulf of Mexico deepwater discovery in 1999 at Crazy Horse (now known as "Thunder Horse" … see sidebar, left).

This is a story about that story.


BP made its entry in the deepwater Gulf of Mexico in 1988 on the heels of its merger with Sohio. By that time much of the prospective acreage had been leased up by a couple of major players, so BP found its niche as a partner in projects with other companies.

"That effort was actually quite successful," said David Rainey, exploration manager for BP in the deepwater Gulf of Mexico, adding that from 1988 to the early 1990s the company had several successes, such as Mars and Ursa, in partnership with Shell.

"We were certainly riding Shell's coattails at that point," he said, "but those successes did allow us to predict a production stream that would grow to about 150,000 barrels per day from essentially nothing."

Based on those initial results, BP in 1995 was predicting that through continued exploration success the firm could grow its production stream to around 200,000 barrels a day by 2009-2010, and then production would likely decline.

The company's scientists, however, began wondering if that's the best they could hope for — or if there was something more they could aspire to.

"At that time we began a far-reaching study on the deepwater Gulf of Mexico," Rainey said, "and one of the things we did was look more closely at the evolution of the shelf."

History told them that companies first got their feet wet in the Gulf at the end of World War II, and production grew slowly through the 1940s and '50s. By the 1960s production accelerated and hit three million barrels of oil equivalent a day in 1972.

"The shelf continued delivering at that rate for the next 30 years, which is quite a remarkable feat," Rainey said, "and yet here we were looking for our own production stream to go into decline in just 10 to 15 years.

"We started asking, is that the correct expectation?"

Comparison Shopping

Actually, BP did more than just look at the Gulf's shelf history. The firm did some comparative analysis of the shelf's producing region and the deepwater, which aerially are the same and share some very basic geologic parameters.

"What we found was that the charge systems we were just beginning to understand in the deepwater were at least as good, if not better, than on the shelf," Rainey said, "and the density and diversity of trapping mechanisms in the deepwater was every bit as high as the shelf — although they were different types of traps.

"The other major risk factor, of course, is reservoir, which in the early days of deepwater exploration was perceived as the critical risk," he said. "Early on nobody could see how sand could possibly get out into the deepwater, but the early drilling successes removed reservoir as a critical risk.

"So, by 1995 from a geological perspective we had an area just as big as the shelf with charge systems as good as the shelf, trap density that was every bit as high as on the shelf and we had a lot less concerns about reservoir than in earlier years," he said.

"With all those factors in our favor we began questioning why the deepwater shouldn't evolve in the same fashion as the shelf."

BP looked at the characteristic way basins typically evolve, with bigger fields being uncovered early and then progressing through smaller and smaller finds. The study showed the initial phase of large discoveries on the Gulf of Mexico shelf had taken 40 years, so the company plotted similar curves for the deepwater — and realized there was no sign of decline in big discoveries.

"We then plotted the deepwater relative to the shelf," he said, "and came to the conclusion that the deepwater could ultimately deliver at least 40 billion barrels of oil as well.

That was "quite contrary to the thinking in the mid-1990s," he added, when the deepwater had booked reserves of about five billion barrels of oil and "conventional wisdom held that ultimate reserves from the region would likely be about 10 billion barrels."

Digging Deeper

The historical evolution of the Gulf of Mexico Shelf — and the implied time frame for the deepwater — initially made BP uncomfortable.

The firm's background was dominated by work in Alaska and the North Sea, both of which matured much quicker than the Gulf of Mexico shelf; the phase of large discoveries in Alaska was three years and in the North Sea five to 10 years, based on BP's experience.

Why did the Gulf of Mexico shelf evolve so slowly?

The answer lies in the complexity of the subsurface.

"Alaska, for example, is geologically relatively simple, and to a lesser extent so is the North Sea," Rainey said. "The sheer geologic complexity of the Gulf of Mexico, particularly around mobile salt, trapping complexities generated by the mobile salt and imaging problems created by the salt all combined to make exploration in the Gulf difficult.

"You can look at these differences as an advantage or disadvantage, depending on your point of view," he continued. "In Alaska, where exploration was essentially over in three years, the simple geology was an advantage for us, since we had an early stake in the play — the life of the play was shorter than the lease term. "That's why to this day there are only two operators in Alaska. As a late entrant into the Gulf of Mexico, the complexity of the play was in our favor since we were still able to carve out a position in the region."

Following the 1995 Gulf study, BP looked at its options. The company was convinced that the play "would have longer legs" than it previously had predicted. However, the implication for the production stream of "doing more of the same" was simply to sustain the business at about 200 mmboe/d. It did nothing to transform the business — and BP was interested in transforming the business.

A couple of new developments occurred simultaneously with BP's research:

Drilling contractors were developing a new generation of rigs that could drill in much deeper water depths. At that time the upper limit of the deepwater play was 5,000 feet and these new rigs could drill in 10,000 feet of water.

The new generation rigs could drill to 30,000 feet subsea. The subsea limit at that time had been around 20,000 feet.

"These new rigs opened up new geography and new geology, which prompted us to think about new plays that might be exposed by the new geography and geology," Rainey said.

BP realized that in the past companies had essentially stepped off the shelf and pursued the same sort of plays into progressively deeper water — amplitude driven plays associated with allogonous salt, with young stratigraphy and complex traps. BP started looking at the possibility of deeper plays where the stratigraphy was older and targets were subsalt versus adjacent to salt.

"We could see hints of larger, potentially simpler traps under the salt," Rainey said, "and began exploring that opportunity."

BP did some modeling around these potential targets, making some assumptions about pool sizes based on structures they could see on seismic.

"We looked at the outcome for the firm if we pursued these plays at a reasonable pace of exploration and reasonable success rates," Rainey said, "and came to the conclusion there was the opportunity to transform the business.

"Instead of sustaining production of 200,000 barrels of oil a day, we would potentially grow a business that could deliver 500,000 barrels a day."

With its new vision for deepwater Gulf strategy defined, BP shifted its prospect inventory from shallow plays to deeper targets, outpacing most of industry by a year.

Over the last several years BP has drilled 15 prospects generated using its new deepwater model, with impressive results: the success rate has been between one in two and one in three, Rainey said.

Lessons Learned

Crazy Horse, the largest field ever uncovered in the deepwater Gulf with one billion barrels of estimated recoverable reserves, is by far the most important discovery. An additional discovery close to Crazy Horse has pushed the reserve estimates for the area to about 1.5 billion barrels and the fields are currently under development.

Crazy Horse is in 6,000 feet of water in the Boarshead Basin, 125 miles southeast of New Orleans. BP is operator and holds a 75 percent interest. Partner ExxonMobil holds 25 percent equity. Crazy Horse, along with several other giant discoveries will be on production by 2007 and BP plans to build a massive deepwater transportation system — the largest proposed to date in the deepwater Gulf — to get the production to market.

Today BP holds interests in more than 30 deepwater discoveries or producing fields, including most of the largest fields, accounting for 36 percent of the total resources from the deepwater. The company ranks second among Gulf of Mexico deepwater producers with daily production of 259,000 net barrels of oil equivalent — and those figures are expected to double by 2005 and more than triple by 2007.

The future looks bright as well. BP holds more than three million acres under lease, the largest deepwater Gulf acreage inventory.

And what did BP learn along the way?

"From an imaging perspective, moving our inventory from time imaging to depth imaging has been critical," Rainey said. "We have a better understanding of the entire petroleum system, from where the source rocks are to how they mature to how fluids actually move through the system."

But despite its tremendous success in the last several years, don't expect BP to rush out and increase its activity.

"We will likely be taking some time in the next few months to learn from our recent activity," Rainey said. "One of the lessons we have learned about the Gulf of Mexico is never to take it for granted. It will continue to surprise us, and in those surprises will lie new opportunities.

"We're going to do our best to stay humble and avoid the trap of thinking that we have all the answers."

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