Discoveries down, but activity remains strong

Activity still continues in the shallower waters of the Gulf of Mexico. (Photo courtesy: Coastal)

• Deepwater discoveries in the Gulf of Mexico in water depth greater than the 1,500 ft. [173,630 bytes]
• 1998 deepwater discoveries (1,500 ft) [34,878 bytes]
• Selected deepwater production systems installed, planned in the US Gulf [43,484 bytes]
• Selected newbuild deepwater vessels scheduled for arrival in the US Gulf [52,607 bytes]
• Deepwater Discoveries in the US Gulf of Mexico (1,500 ft) [258,844 bytes]

While drilling continues at a reasonably strong pace in the deepwater Gulf of Mexico (showing some decline from last year), the discovery rate has slowed to a crawl. In January and October of each year, Offshore publishes a listing of the deepwater discoveries in the Gulf of Mexico. Since the October listing, only one discovery has been made beyond the 1,500 ft water depth contour.

Shell, CNG, and Murphy encountered success in 2,521 ft of water in Viosca Knoll 827 with the North Marlin prospect. The well penetrated a 135 ft hydrocarbon-bearing interval at 11,500 ft. The sands encountered in the well were similar to Shell's adjacent 100 million bbl plus Tahoe Field.

In January of last year, 22 new discoveries were reported made during 1997, and eight were reported from the previous report in September 1997 (in water depths 1,000 ft). This year that number has dropped to only five discoveries ( 1,500 ft) in one year's time, and one discovery since October. This marks a major decline in the discovery rate.

However, this decline in the discovery rate should not overshadow the impact of these discoveries. The Llano discovery, for example, is estimated at holding 1 billion bbl of oil. This makes it one of the largest discoveries in not only the Gulf of Mexico, but also the world. Shell's new North Marlin also holds vast potential with characteristics similar to the 100 million-plus bbl Tahoe Field. These discoveries, while small in number, are enormous in size and keep the Gulf in the forefront of the world's activity.

Overtaking exploration

Regardless of the size of the fields, it is still evident exploration is exhibiting a slowdown. One of the key reasons for this, aside from the meager times and cutbacks in programs, is a shift in drilling. While drilling still remains strong in the Gulf, operators are doing more development drilling than exploratory drilling. Operators are drilling several development wells on their discoveries while waiting for some of these major production systems to come onstream in order to increase initial production.

Several major deepwater production systems were installed over the past year, and more are planned for later this year. (see table).

Another factor restricting exploration, in the deepwater at least, is the pending arrival of the new deepwater fleet. Many operators' major deepwater exploration plans are contingent on the arrival of the vessels on order. Several of these vessels have been delayed and as a result have delayed exploration plans.

Hubbing increasing

One aspect that has been affecting the deepwater activity in the Gulf is the increase in the use of the hub development plans. Operators are designating more and more structures as hubs for their deepwater fields in order to cut costs and increase production. Some fields that were destined for hubs in the recent months are:

• Morpeth (Ewing Bank 965) will hub Black Widow (Ewing Bank 966)
• Baldpate (Garden Banks 260) will hub Penn State (Garden Banks 216)
• Cooper (Garden Banks 388) will hub Llano (Garden Banks 386)
• Auger (Garden Banks 426) will hub Macaroni (Garden Banks 602)
• Bullwinkle (Green Canyon 62) will hub Angus (Green Canyon 113)
• Mars (Mississippi Canyon 807) will hub Europa (Mississippi Canyon 934, 935, 890, and 891)

Other activity

In water depths shallower than the 1,500 ft contour, activity still remains strong. A recent surge in subsalt drilling has really enforced the Gulf's position as an oil and gas producer. Anadarko has hit two major subsalt discoveries in recent months with Tanzanite (Eugene Island 346) and Hickory (Grand Isle 116).

Tanzanite exhibited record-setting flow rates at 21,917 b/d of oil and 29.7 MMcf/d of gas. This was one of the highest flow rates ever tested by industry in the shallow water Gulf.

This area, known affectionately as the "subsalt fairway," is becoming the target of many independents. Several companies have begun scrambling to get a piece of this trend, leaving the deepwater to the larger majors.

Some independents are sticking to the shelf, for the most part. With majors cutting their shallower exploration plans in lieu of the more profitable, higher profile deepwater, independents are picking up the leftovers and making several key discoveries. With gas prices more stable than oil and the presence of a strong infrastructure, these operators are finding survival on the shelf a stable business.

Overall, the Gulf of Mexico has emerged as one of the harder hit regions in this latest downturn. However, operators are making do and trying to continue their operations. Majors and larger independents seem to be moving their concentration towards the deepwater while the smaller independents are carving out an existence in the shallower water and subsalt.

And drilling, while down from last year, is still continuing, especially on the development side while operators wait for production systems to be built and installed. Exploration does, however, promise to increase - especially in the deepwater. With the arrival of several new purpose-built deepwater rigs, exploration programs are already in the works. But, until their arrival, operators will be doing their best to maximize future production with increased development plans.

Deepwater survey

Ninety-one discoveries have been made in Gulf of Mexico water depths greater than 1,500 ft. Sixty-nine of these discoveries have been given prospect names, while the remaining 22 have yet to be named. Of the discoveries 72 are in the planning stage, with the remaining 19 in production.

Offshore Magazine's US Gulf Deepwater Survey lists each field by name, location (block number), water depth, operator (partner), stage of development and production type, year of discovery, year of first production, estimated or proven reserves in millions of bbl oil equivalent (BOE), and peak/test production (oil/gas). A dash indicates that the information was unavailable at press time.

Each listing has a number that corresponds to the following map. Numbers on the map in red indicate that the field is in production; numbers in yellow indicate the field is in the planning stage. Fields below the 1,500 ft contour are listed on a separate chart.

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