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Deepwater promise MMS: Another 56 billion barrels yet to be discovered in deepwater Gulf Ray Tyson Petroleum News Houston Correspondent
Deepwater Gulf of Mexico keeps moving along with a recorded 86 producing projects at year-end 2003, up more than 50 percent in the span of just a few years. And there appears to be plenty of oil and gas discoveries to keep pipelines full for years to come.
So, how long can the good times roll?
In its latest report, “Deepwater Gulf of Mexico 2004: America’s Expanding Frontier,” the U.S. Minerals Management Service contends that 56 billion barrels of an estimated 71 billion barrels of total oil equivalent reserves remain to be found in the deepwater Gulf.
Deepwater oil production rose more than 840 percent and deepwater gas production increased about 1,600 percent from 1992 to 2002. Of the 7,800 active oil and gas leases in the Gulf, 54 percent are in deep water.
Exploration drilling in 2002 and 2003 alone turned up more than 2 billion barrels of oil equivalent, MMS noted, adding that a dozen fields came on stream in 2003, with another 13 planned in 2004 and “many more” to come down the road.
“The future of deepwater Gulf of Mexico exploration and production remains very promising,” MMS concluded. Financial, technical challenges in deeper waters However, there will be financial and technical challenges as industry moves into deeper waters in pursuit of bigger targets. In fact, MMS says the Gulf’s “new frontier” now lies in waters greater than 7,000 feet, representing a dramatic shift in deepwater exploration.
Still, in the last three years, there have been 12 announced discoveries in the so-called “ultra-deepwater” over 7,000 feet: Aconcagua, Camden Hills, Blind Faith, Merganser, St. Malo, Trident, Cascade, Great White, Vortex, Atlas, Chinook, Jubilee, Spiderman-Amazon and Tobago.
MMS argues that the presence of deeper, pre-Miocene reservoirs, successes in the recently opened Eastern Gulf of Mexico sale area, and significant discoveries in the ultra-deepwater further demonstrate the continuing exploration potential in deeper waters of the Gulf.
“These new plays are large in aerial extent, have multiple opportunities, and contain huge traps with the possibility of billions of barrels of hydrocarbons,” the agency said.
MMS cites advances in 3-D seismic imaging that led to such major subsalt discoveries as Mad Dog, Atlantis, Tahiti, Thunder Horse and North Thunder Horse as further evidence of deepwater Gulf’s potential. The agency also noted that great expanses of the Gulf’s deepwater out to 10,000 feet are now covered in 3-D seismic, reducing “the inherent risks of traditional hydrocarbon exploration and allow imaging of previously hidden prospects.”
Time-lapse seismic surveys, also known as 4-D, likely will be “the next significant seismic technology” to be applied in deepwater Gulf, MMS said, adding that the high cost of drilling deepwater wells and challenges related to re-entering wells “may promote” the use of 4-D seismic.
“The technique can be applied to characterize reservoir properties, monitor production efficiency, and estimate volumetrics from inception through the life of the field,” MMS said. Subsea well completions enhance economics The rapid escalation of subsea well completions and tiebacks to existing production platforms, commonly used in shallower waters of the continental shelf, also has greatly enhanced the economics of marginal discoveries in deepwater Gulf.
“The technology required to implement subsea production systems in deepwater evolved significantly in the last decade,” MMS said, noting that 70 percent of subsea completions are in water depths greater than 2,500 feet. So far, Camden Hills in the Eastern Gulf has the deepest production in the Gulf, in water depths of 7,216 feet.
About 300,000 barrels of oil and 2 billion cubic feet of gas per day come from deepwater subsea completions, which currently account for about 30 percent of deepwater oil production and about 50 percent of deepwater gas production.
The length of a pipeline tying a subsea completion to its host platform also has increased significantly. Most subsea wells are within 10 miles of platforms, with the Mensa field holding the world record at 62 miles. The world’s second longest tieback (55 miles) project in the world is Canyon Express, linking Aconcagua, Camden Hills and King’s Peak to their host platform in the Eastern Gulf.
Perhaps the most attractive features of deepwater Gulf are the high production rates of wells and the sheer size of reserves, which average 86 million barrels of oil equivalent per field versus 5 million barrels in shallower waters. The Thunder Horse complex in Mississippi Canyon, the largest discovery in the Gulf, holds an estimated 1.4 billion barrels of reserves. Agency sees lag between exploration and first production MMS attributes an apparent decline in proved deepwater reserve additions in recent years to lag time between exploratory drilling and development. It can take years before companies begin booking reserves from discoveries.
“Because of the lag between exploratory drilling and first production, the true impact of recent, large deepwater exploratory successes is not reflected in MMS proved and unproved reserve estimates,” the agency explained.
Nevertheless, there should be no dispute with MMS research showing the number of deepwater rigs and exploratory wells drilled on average has been on the decline in recent years, although the agency also sees a silver lining in these seemingly troubling statistics.
MMS points to its so-called “creaming curve” to illustrate what can be reasonably expected in the way of discoveries in the future. While its model contains fewer discoveries, the fields tend to be large, resulting in a reserve curve with a steep and favorable slope.
“The slope indicates an area that is still in an immature exploration phase with many large fields awaiting discovery,” MMS said. “The limited number of discoveries, steep slope of the curve, and large amount of hydrocarbon volumes already discovered support this prediction.”
And while the overall number of deepwater exploratory wells has declined during the past two years, MMS said a “considerable drilling activity” has occurred in water depths greater than 7,500 feet, realm of the new frontier.
Explorers, in search of untested geologic zones, also are going deeper in terms of overall drilling depth. A record 31,824 feet, including the water column, was achieved in 2003.
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