Drilling activity picks up in US Gulf

June 4, 2019

Mid-size operators, independents most active

E&P activity in the US Gulf of Mexico may finally be picking up. A number of notable metrics are expected to increase this year, including the first increase in drilling in four years according to a recent analysis from global natural resources consultancy Wood Mackenzie. In its annual outlook, “US Gulf of Mexico: 5 things to look for in 2019,” WoodMac said that after four years of steady decline, exploration activity is expected to increase this year by 30%.

Drilling activity is picking up in both shallow and deepwater; and in many cases, the mid-size operators and independents are leading the way.

For example, Otto Energy recently entered into a joint venture with Talos Energy for the Green Canyon block 21 in the Gulf of Mexico. Otto says it will earn a 16.67% working interest in the block by paying 22.22% of the cost of drilling the Bulleit appraisal well.

Talos has contracted the drillship Noble Don Taylor to drill the appraisal well, which is expected to start in the middle of 2Q 2019.

Bulleit is an amplitude-supported Pliocene prospect with similar seismic attributes to the analogous sand section in Talos’ Green Canyon block 18 field, which has produced approximately 39 MMboe to date. The Bulleit prospect is in approximately 1,200 ft (366 m) of water. If successful, the well would be completed and tied back to the Talos-owned and -operated facility on Green Canyon block 18 approximately 10 mi (16 km) away. Talos anticipates first production within 12-18 months from spud date and estimates that Bulleit has the potential to deliver initial production between 8,000-15,000 boe/d gross on an unrisked basis.

Meanwhile, GulfSlope Energy Inc. reports that it has completed several operational milestones related to its 2019 drilling program and prospect portfolio.

The company recently filed an exploration plan with the United States Department of the Interior, Bureau of Ocean Energy Management related to Vermilion Area, South Addition blocks 375 and 376 (Corvette prospect).

The company has also received notice of award of two offshore lease blocks for which it was the high bidder at the region-wide Gulf of Mexico Lease Sale 251 conducted by BOEM. The sum of the awarded high bids was $322,022 on the leases awarded to the company. The blocks awarded and the corresponding bonus amounts that have been paid are:

* Vermilion, South Addition block 376                       $191,011

* Eugene Island, South Addition block 371               $131,011

Both leases have a five-year primary term and carry a 12.5% royalty to BOEM. The EI 371 block represents a new prospect and has been named Freedom. This prospect will target subsalt Miocene oil reservoir pay sand objectives and has a trapping style related to salt flanks similar to the existing subsalt prospects in the company’s drilling portfolio.

Drilling on the Tau subsalt prospect began on Sept. 13, 2018. The wellbore is designed to test multiple Miocene horizons trapped against a well-defined salt flank, including equivalent reservoir sands discovered and developed at the nearby Mahogany field. The surface location for Tau is in 305 ft (93 m) of water.

During drilling operations, the well encountered difficulties associated with shallow faults requiring two additional casing strings prior to setting 13-5/8 in. casing above salt. Drilling is now proceeding in the main salt section. GulfSlope is the operator of the Tau well with a 20% working interest. Delek GOM Investments LLC, a subsidiary of Delek Group Ltd. owns a 75% working interest and Texas South Energy Inc. owns a 5% working interest.

In March, Talos Energy reported that its Helix Producer 1 drydock project was completed in 1Q 2019, and that the HP-1 departed the shipyard on March 7, 2019. After a period of sea trials, the company expected production from the Phoenix complex to re-start on or about March 20, 2019, resulting in a total shut-in period of 56 days.

The Tornado 3 well was drilled in December 2018 and was scheduled to begin completions operations in late March, with an expected duration of 21 days. The well is anticipated to start production by early 2Q 2019, with an expected gross production rate between 10,000-15,000 boe/d, or 5,000-7,500 boe/d net to Talos after royalties. Talos is the operator and owns a 65% working interest, with Kosmos Energy owning the remaining 35% working interest.

In January, the Boris 3 well was spudded and drilled to a TD of about 15,000 ft (4,572 m) and logged about 75 ft (23 m) gross and 56 ft (17 m) net of true vertical pay, 360 ft (110 m) updip of 27 MMboe of historical production in the B-4 Sand. Boris 3 was scheduled to begin completion operations in mid-April with an expected duration of 21 days and is expected to initiate production in 2Q 2019. Initial production is expected to be between 3,000-5,000 boe/d gross, or 2,800-4,600 boe/d net to the company after royalties. Talos is the operator and owns 100% working interest in all Boris wells.

Talos also reports that it has signed a participation agreement to engage in the drilling of the Orlov prospect on Green Canyon block 200. Fieldwood Energy will be the operator and Talos has a working interest of 30% in the prospect. Orlov is an amplitude-supported Miocene prospect with similar geophysical and structural attributes to the Talos-operated Boris field, which has produced approximately 27 MMboe to date. If successful, the well would be completed and tied-back to the Fieldwood-operated Bullwinkle fixed-leg production platform on Green Canyon block 158. First production is anticipated within 12-18 months from spud date and estimates that Orlov has the potential to deliver between 8,000-15,000 boe/d gross on an unrisked basis. •

Courtesy SBM Offshore / GustoMSC via aukevisser.nl
Courtesy Valeura Energy Inc. Corporate Overview May 2024