DOT: $50-$70/bbl oil needed to justify Lower Tertiary development

About $50-$70/bbl oil is needed to justify the development of Lower Tertiary fields in the US Gulf of Mexico, suggested Richard D'Souza, Granherne Americas/KBR, in response to a question following his presentation on Tuesday at the Deep Offshore Technology Conference & Exhibition in New Orleans, Louisiana.

Offshore staff

NEW ORLEANS -- About $50-$70/bbl oil is needed to justify the development of Lower Tertiary fields in the US Gulf of Mexico, suggested Richard D'Souza, Granherne Americas/KBR, in response to a question following his presentation on Tuesday at the Deep Offshore Technology Conference & Exhibition in New Orleans, Louisiana.

D'Souza talked about the technical and economic challenges in developing Lower Tertiary fields. Some of the characteristics of the trend are low rock permeabilty, high pressure and temperature, deep reservoirs in deepwater, high viscosity/low GOR fluids, large salt canopies (7,000 ft to >20,000 ft), and remote from existing infrastructure, he said.

Lower Tertiary drilling has had a high success rate of about 60% since the first discovery on Great White in 2002, D'Souza said. "MMS estimates 3-15 Bboe are recoverable in the trend, which reflects the uncertainty of the reservoir and well performance."

Drilling and completion dominate the development cost of a Lower Tertiary well, D'Souza said. A typical well could take 200-250 days to drill at $150-$250 million. The drilling and completion phase is about 50-60% of the overall field development cost, he said.

Minimizing uncertainty in reservoir performance and well productivity is one of six keys to commercially developing Lower Tertiary reserves, D'Souza explained. He pointed to three strategies to reduce uncertainty: Drill stem test (up to 60 days), extended or long-term test (6-24 months), and early production or phase development (more than three years). Ideally, you need to flow a well at least 12 months to increase confidence in well rates and recovery, he said.

A drill stem test was carried out on Chevron's Jack discovery, an extended well test has not yet been done in the GoM, and Petrobras is using a phase development approach for its Cascade-Chinook project.

Some form of artificial lift is required for Lower Tertiary wells, D'Souza said. Downhole (ESP) or mudline pumps are most effective in maintaining reservoir pressure, but water injection and gas lift also are viable options. Subsea boosting and processing are possibilities, but a step change in the technology is needed to meet the technical challenges in the Lower Tertiary, he said.

Shell is using subsea processing for its Perdido development, slated for first production in late 2009/early 2010. The technologies developed for Perdido and Petrobras' Cascade-Chinook, scheduled for first production in 2010, "will be enablers for the many Lower Tertiary discoveries in the queue," D'Souza said.

2/3/2009

More in Regional Reports