MMS highlights 2004 deepwater activity

Jaime Kammerzell
Gulf of Mexico Editor
Offshore

The Minerals Management Service announced the latest version of the biennial report. It chronicles the deepwater oil and gas activities in the Gulf of Mexico over the last 13 years with a focus on the latest deepwater discoveries.

Chris Oynes, regional director, Gulf of Mexico region, MMS, said at the Offshore Technology Conference in Houston on May 3, "The deepwater GoM continues to be an expanding frontier with many new discoveries and new geologic plays."

He also pointed out that leasing activity remained robust with 513 new deepwater leases in 2004 versus 510 in 2003. But the biggest story, according to Oynes, is exploration drilling. The MMS saw a substantial increase – up from 74 in 2003 to 94 in 2004 &ndash in exploration drilling. Oynes noted that exploration drilling is the beginning of all projects and is a good precursor of things to come. He also said that the number of exploratory wells in 2004 tied the record at 36 and set another record, this one for 7,500 ft or greater water depth, at 16 wells drilled.

One statistic looming in the near future is the lease expirations. More than 2,400 leases are potentially eligible to expire in 2006-2007. However, as these leases expire, the MMS will turn around and re-lease them in the next year's lease sale. The government agency expects a robust response from companies eager to lease them, Oynes said.

Oynes also added three new deepwater oil and gas discoveries to the 2004 list, bringing the total to 15 discoveries last year. He called 2004 the "year of the spar," as four spars came online last year compared with two TLPs.

Twelve deepwater wells were drilled in water depths greater than 5,000 ft. The discoveries demonstrate that exploration in the deepwater GoM continues to be vibrant, Oynes said.

He pointed to the Paleogene play in the Alaminos Canyon area as one to watch. New discoveries – Tobago, Silvertip, Tiger, Jack, Genghis Khan, and Wrigley – are all ultra-deepwater wells discovered in 2004 and 2005 and are near this Paleogene play.

Ultra-deep discoveries are far from shore and may employ the first FPSO in the GoM, Oynes speculated. He said the Alaminos Canyon area is prime for an FPSO, but questioned what the operators would do with gas. Of course, a pipeline could be considered, but the terrain is difficult and the cost to run a pipeline that distance in record over 7,000 ft of water might prove too costly.

Other notable statistics the MMS released today include:

• There are 107 deepwater projects on production as of March 2005. Production from the deepwater frontier grew to an estimated 922,000 b/d and 3.9 bcf/d of natural gas by the end of 2004. Deepwater oil production accounted for approximately 64% of the Gulf's oil production in 2004

• Significantly, in the last four years, there have been 18 industry-announced discoveries in water depths greater than 7,000 ft

• A record 16 exploratory wells drilled in water depths greater than 7,500 ft

• A record number of four spars were installed in 2004

• Significant strides were made to bring the ChevronTexaco Tahiti project on production

• The installation of the world's largest spar at Holstein in Green Canyon block 644 and the world's first cell spar at Red Hawk in Garden Banks block 877

• The installation of the deepest TLP in the world, Magnolia in Garden Banks block 783 in 4,674 ft of water.

05/03/05