The need for new natural gas resources to feed the US economy was brought into focus this week with Alan Greenspan's mention of the current structural limitations of natural gas supply. What was not emphasized was the potential for the US offshore shelf to deliver new gas volumes. That issue was brought in the spotlight this week by a technical conference, Back to the Shelf, coordinated by The Energy Forum.
The focus of the second of four Gulf of Mexico Deep Shelf conferences was the geoscience needed to find and develop hydrocarbon resources from below 15,000 ft. Wells drilled below this depth qualify for the MMS Deep Shelf Royalty Relief program, which provides incentives for deep, technically challenging drilling on the GoM shelf.
The evolving frontier play could hold an estimated 20 tcf of natural gas reserves. The play has seen sporadic drilling since the 1960s. Even so, operators have drilled only 3,903 wells in the deep shelf, a fraction of the drilling in the shallower shelf zones (see Offshore, June 2003). The deep shelf still has the potential for very large discoveries. Statistical studies show that the average field size is around 30 MMboe.
According to Craig Jarchow, regional exploration manager for Apache, there is no order-of-magnitude (10x) force driving the play. To be successful in the play, all the different geologic and technologic pieces must be in place to find new reserves.
In his view, the play may already have been "creamed" by early drilling. The play is economically acceptable, but there is no windfall for the industry. For a company to be successful, this play must be combined with others, Jarchow said. It is not a stand-alone play that can carry a company on its own. It can be tapped now due to the confluence of incremental technology advances and the positive economics of higher prices.
Emphasizing the technical challenge of the deep shelf, Ted Spalding, area exploration manager for Pioneer Natural Resources, reminded attendees that the larger discoveries are always found at the technical margins of our scientific methods and tools. This demands that geoscientists and their managers integrate regional data sets, use the best available technologies, operate with a program approach, and be willing to accept risk to push just beyond the envelope of our understanding.
The deep shelf is at the imaging limit of our present seismic data sets. Eventually, longer offset data will be needed to evaluate the deep rocks contorted by salt movement. New seismic shooting will be required to image the horizons distorted by complex slat-sediment boundaries and to extract the seismic derived rock properties essential for understanding rock character before detailed information from drilling.
Amplitude versus offset data indicate that most of the deep plays are Class II anomalies, more difficult to interpret than the Class III anomalies that most companies prefer to drill. Even with these uncertainties, drilling success ranges from 20-30%, an acceptable industry rate for wildcat drilling.
The overall message from the conference was that deep shelf exploration is not an easy task. A complete understanding of the regional geology is essential before narrowing the investment viewpoint to specific prospective leases. Full depth-migrated imaging provides the best available tool to answer geological structural questions. Applying the latest drilling technologies will control the overpressure conditions for safe, efficient drilling. A steady, consistent, long term business approach to this new play will reap new natural gas resources for the US and consistent profits for companies active in the trend.