Deepwater Gulf of Mexico update

March 2, 2020
Oil prices have been on the rebound – more or less – since the summer of 2017. Yet E&P activity in the US Gulf of Mexico has remained sluggish. That may be beginning to change.

Oil prices have been on the rebound – more or less – since the summer of 2017. Yet E&P activity in the US Gulf of Mexico has remained sluggish.

That may be beginning to change.

In January, Murphy Oil Corp. provided an update on its E&P activities in the deepwater GoM. The company said that its Gulf of Mexico production averaged 82,000 boe/d in 4Q 2019.

During 4Q, the Nearly Headless Nick well in Mississippi Canyon block 387 came online with a peak rate of about 6,900 boe/d. The Chinook #5 well workover in Walker Ridge block 425 was completed with a peak rate of nearly 13,000 boe/d. The Medusa A6 well in Mississippi Canyon block 582 came online at a peak rate of more than 1,600 boe/d.

A subsea equipment malfunction at the three-well Neidermeyer field in Mississippi Canyon block 209 caused a five-day impact. One well remains down during equipment repairs, which are expected to be completed by 2Q 2020.

As for the Khaleesi / Mormont and Samurai field development projects, the company recently awarded subsea engineering and construction contracts.

In addition, Murphy has allocated about $480 million, or 33%, of its 2020 capex to its offshore assets, with 30% planned for the Gulf of Mexico and the remaining 3% for Canada.

The company said its Gulf of Mexico capital will be used for both development drilling and field development projects, including the three-well rig program at Front Runner, activities related to the Khaleesi / Mormont and Samurai developments, St. Malo waterflood, planned well workovers, and various non-operated projects.

Talos Energy also provided an update on its US GoM operations in January. In 4Q 2019, the company’s production was about 3.6 MMbbl of oil, 0.3 MMbbl of NGLs, and 6.2 bcf of natural gas, representing about 54,000 boe/d.

At Orlov in Green Canyon block 200, operations re-started to continue drilling to a deeper prospective target zone prior to starting completion activities of the main objective, the Aspen J sand. The deepening project encountered about 55 ft (17 m) of high quality, net true vertical thickness oil pay.

The Aspen J target was subsequently completed and achieved first oil in mid-January 2020, averaging a production rate of about 4,000 boe/d gross, or 1,000 boe/d net. Talos holds a 30% working interest in the Orlov prospect, which is operated by Fieldwood Energy.

The Puma West exploration well in Green Canyon block 821 has been temporarily suspended after setting casing below salt and reaching a true vertical depth of about 21,500 ft (6,553 m). The top and base of salt were encountered near pre-drill depth expectations.

Plans are being developed to return to the prospect later this year with a slightly modified casing design to continue drilling the well through the main objectives in the Middle and Lower Miocene to a total true vertical depth of about 25,200 ft (7,681 m).

As a result of drilling activity completed thus far, the lease term has been extended for an additional three years through October 2022. BP holds a 50% working interest and is the operator, with Talos and Chevron each holding a 25% working interest.

Talos has contracted the Transocean ultra-deepwater dual-activity drillship Discoverer Inspiration for its 2020 deepwater drilling and completions program in the US Gulf of Mexico. It will assist with the Bulleit completion and tieback project, development activity in the Phoenix complex and potentially one or more high-impact exploration drilling projects, which are currently being evaluated, the company said.

Also, the company has contracted the Helmerich & Payne 100 platform drilling rig for near-field development and exploitation drilling opportunities surrounding its Green Canyon 18 facility, with the option thereafter of similar projects at the Pompano and Amberjack facilities. The contract is evergreen with a rolling 90-day term.

Of course, there is still the occasional disappointment. In January, Kosmos Energy’s Oldfield exploration well will be P&A’d after it did not encounter commercial quantities of hydrocarbons.

Oldfield (Kosmos 40%, Hess 60%) was designed to test a subsalt Miocene prospect in the Mississippi Canyon area. Water depth was about 4,921 ft (1,500 m).

After P&A’ing the well, the semisub Valaris 8503 will move to the Kodiak field to begin operations on a new infill producer well.

The company said it plans to drill three more infrastructure-led exploration wells in the Gulf of Mexico in 2020. •