Management with the Dynamic Group of Houston are convinced after four years of study that they have identified significant new play potential deep on the west Louisiana shelf, a province largely regarded by industry as mature for exploration.
“Most of our industry thinks the U.S. shelf is in late life, and the only remaining opportunities are for low-risk, low volume exploitation targets,” said Rob Pascoe, managing director and chief geologist.
“We believe that may not be the whole story. Our studies describe a large-scale new play, with the potential to be liquids rich and high value,” Pascoe said.
He said new technology and geological insights are the key.
“Our company has been working a new play concept on the Louisiana shelf of the U.S. Gulf of Mexico for the last four years. We had mapped all of the shelf with vintage 2-D and 3-D data and in the process of tying the seismic to well data, we realized that there are amazingly few penetrations of the middle and lower Miocene section in the interval between the prolific, producing, shelf margin deltas and 200 miles downdip to their age-equivalent basin-floor fans. We then focused on an area of 400 blocks with 2016 processed ocean bottom cable, 3-D data from Fairfield Geotechnologies. The work we have done involves regional stratigraphic and petroleum systems mapping. The play targets the middle and lower Miocene in mid-slope salt mini-basins at depths of 14,000 to 22,000 feet, beneath historical drilling in the area.”
History of Exploration
The Dynamic Group, a privately owned and self-funded Houston-based company founded in 2007, has been conducting multiclient studies in the Gulf since 2011 and in 2016 began considering opportunities to leverage their basin knowledge to participate as an E&P lease holder.
“Our proprietary deep-water, deep-imaging 2-D seismic ‘SuperCache’ had provided significant insights into regional petroleum systems and new play potential and highlighted for us the possibility that many of the technological and conceptual advances that the industry has made in deep-water in the last 30 years have not been applied to the shelf,” Pascoe said.
He said the west Louisiana shelf is attractive in a business context for several reasons, including its stable fiscal and regulatory environment, that it is a proven play above the middle lower Miocene, the presence of existing pipeline infrastructure tied to premium Gulf Coast markets for oil, gas, and gas liquids, and a short cycle time from exploration drilling to production.
The proven producing play on the west Louisiana shelf is in deltaic sandstones, commonly with bright spots, Miocene near shore and Pliocene-Pleistocene on the mid to outer shelf, Pascoe said.
The initial discoveries were in 1947, peaking in the early 1960s and again in the early ‘70s, with 95 percent of the ultimate reserves discovered by the early 1980s. An estimated 98.2 percent of the original discovered reserves have been produced, according to 2017 data from the Bureau of Ocean Energy Management, Pascoe said.
Production declined through the ‘90s. Pascoe said a new subsalt flex trend play was realized in the early to mid ‘90s, but the subsalt seismic technology and understanding of the source to sink depositional systems was not there to exploit it. The area has seen a rapid decline in exploration drilling since 1997 to only a handful of wells per year now.
New Technology Drives Opportunity
Pascoe said some might wonder why this opportunity exists after 70 years of drilling on the shelf.
After discovery plateaued and oil prices crashed, “The majors began reducing exploration focus on the shelf from 1986, a decade before the technological advances in deep-water petroleum systems and reassessment of basin source-sink regional geology had begun,” he said.
The initial high quality deep-water (current and depositional water depth), Pliocene-Pleistocene mini-basin discovery was at Bullwinkle in 1983, but the first truly high-performance deep-water production wells were not until Auger in 1993. The first giant deep-water Miocene discoveries were not until 1998-99; the first high-quality subsalt seismic images and drilled prospects were in the early 2000s.
The first deep-water Paleogene (Wilcox) discoveries in the early 2000s led to that play being followed back on to the shelf – nine wells drilled to greater than 25,000 feet (mostly greater than 30,000 feet) initially by the majors and then by Freeport-McMoRan. This proved a working deep petroleum system in not only the target Paleogene and Cretaceous reservoirs, but also in the lower Miocene, but production technology limitations, huge drilling cost overruns and a collapse in gas prices in 2006 halted further ultra-deep exploration.
Pascoe provided the following drilling history of the west Louisiana shelf deep Miocene play area (as of 2018):
Area defined as outboard of lower and middle Miocene shelf edges, from the Texas border to the modern bird-foot delta, with 22,961 exploration wells
188 wells were drilled to depths greater than 18,000 feet, of which only 13 were post-2009 and one post-2013
23 wells were drilled to greater than 20,000 feet
15 wells reach the lower Miocene or lower sediments, but only two wells are interpreted to have tested the lower Miocene on depositional transport fairways (not on top of salt pillows or diapirs), both have thick sandstone reservoirs (but are buried too deeply to be commercially viable).
Pascoe said the current industry perception of the proven Pliocene-Pleistocene amplitude play is that there is only very small near-field potential, with an emphasis on improving previously poorly imaged targets, and little toleration for exploration risk. No majors or large independents are active on the shelf.
Pascoe said the industry tends to view the deep Miocene stratigraphy outboard of the paleo shelf margin growth faults on the shelf as predominantly a slope bypass interval, with poor reservoir potential. It is seen as predominantly gas and the appetite for drilling deep has been tarnished by the commercial failures of the deep Wilcox programs.
Pascoe said the Dynamic Group has addressed these industry perceptions and risks based on four years of study, and offered the following summary:
- The high-graded area displays clear middle-slope inverted mini-basins with good potential for ponded reservoirs (Modern Beaumont Basin and Pliocene Auger analogs) and robust, large (multi-block) four-way and three-way (against salt) structural closures.
- The onset of risk for effective reservoir modelled to be at on average 22,000 feet, the depth range for the prospects identified is 14,000-22,000 feet with the average being 17,500 feet.
- Within the proven play oil makes up only 26 percent of the total discovered reserves, but within the high-graded area oil is 40 percent of the total discovered reserves, with 16 fields having initial reserves greater than 100 million barrels of oil.
- Oil-rich fields sit adjacent to dry gas fields and depth-mapping of the source rock indicates thermal maturity cannot explain these variations; rather they are likely due to variations in the efficiency of vertical hydrocarbon migration controlled by salt.
- Onset of hard overpressure for the prospects is 11,000 feet to 12,000 feet and reservoir pressures have been modelled as 16-17 pounds per gallon. Deep wells within the area have all been successfully drilled to these depths and pressures in 60-120 days and it is anticipated the cost of wells to test the deep Miocene will be much closer to deep conventional tests than the ultra-deep drilling for the Wilcox a decade ago.
Pascoe gave the following resource assessment of the deep Miocene play:
- More than 20 prospects identified with a mean total resource potential of 3 billion barrels of oil equivalent
- Four years from discovery to first production assuming a standalone new development, with much quicker options available tying back to existing infrastructure
- Value range of $5-10 per barrel of oil.
Dynamic has largely concluded the technical work they consider necessary to bid in upcoming lease sales and are currently actively focused on partnering opportunities and is hopeful that the first well tests of the play will be in 2022.