Will exploration in the deep water Gulf of Mexico ever rival the success of drilling on the Gulf shelf? From now on, it may be even better.
According to current estimates, the deep offshore Gulf has more remaining, recoverable resources than the shoreward provinces. And recent discoveries seem sure to increase resource projections for the deep water Gulf.
BP Amoco opened eyes in July when it announced its Crazy Horse discovery at 6,000 feet water depth in the Boarshead Basin, 125 miles southeast of New Orleans. The company estimated total recoverable reserves at 1 billion boe, the biggest discovery to date in the Gulf's deeper waters
That find was just one of a growing number of deep water successes, however. The U.S. Department of the Interior's Minerals Management Service (MMS) lists 96 deep water Gulf fields, 22 of them already on production.
Impressive discoveries, advanced technology and improved economics have all combined to produce a deep water resurgence.
Better seismic resources also aid exploration in the Gulf, according to Bob Peterson, staff geologist in the MMS Gulf of Mexico Region's Reserve Section in New Orleans.
"The amount of 3-D seismic becoming available in the deep water and ultra-deep water has really been hitting its stride in the past couple of years," he noted. "Some of the early discoveries were drilled on coarse grids. Now, the 3-D is working its way through the system."
Dave Cooke, chief of the MMS Gulf Region's Resource Studies Section, said remaining hydrocarbon resources in the deep water Gulf may slightly exceed those of the Gulf shelf.
"We're looking at mean undiscovered recoverable resources (for the deep water Gulf) of 12.9 billion barrels of oil equivalent," he said. "Our range from our 1995 assessment is 11.5 billion barrels at the 95th percentile to 15.8 billion at the 5th percentile."
That compares with a mean number of 12.5 billion boe for the Gulf shelf. The MMS is now offering a free CD-ROM containing its assessment of Gulf of Mexico and Atlantic Outer Continental Shelf recoverable resources.
To date, no one has painted lines in the Gulf to delineate "deep water" and "ultra-deep water" plays. MMS statistics track the Gulf deep water out from 200 meters of water depth, about 656 feet, a definition set by the Deepwater Royalty Relief Act.
Industry usage typically starts "deep water" at water depths greater than 1,000 feet, although 1,500 feet also is used. AAPG Distinguished Lecturer Neil Braunsdorf of Shell Exploration and Production Technology in Houston notes that the Gulf deep water turbidite play extends from 1,500 feet to 9,000 feet water depth.
Ultra-deep water may start at 5,000-foot water depth, or possibly 7,500, or maybe 2,400 meters.
"A drilling engineer would say, 'If my rig can't drill it, it's ultra-deep'," said Cooke, who prefers a "physiographic, bathymetric definition," because of the Gulf's contours.
The next MMS resource assessment will consider recent deep water discoveries as well as "ultra-deep" Gulf wells, according to Dave Marin, deputy regional supervisor of the MMS Resource Evaluation Section in New Orleans. But by those he means wells with total depths of 20,000-30,000 feet:.
"There's a couple of areas we're looking at now, and for our next assessment we'll be adding in some (recoverable resource) numbers," he said. "We have a team looking in front of the escarpment to see what kind of plays we find there. We'll also be looking at the ultra-deep up on the shelf."
Peterson divides the new deep water Gulf discoveries into subsalt plays and fold-belt or compressional-structure plays seaward of the Sigsbee Escarpment.
"We're talking about two kinds of geologic plays being represented," he said, "both of which have a lot more running room to go."
He described the subsalt play as "a little more traditional," while the other includes only a handful of wells and hasn't been fully defined yet.
"These wells are drilled on compressional structures that are in front of the Sigsbee Escarpment or, in many cases, part of the structure appears to be hidden where the Sigsbee Escarpment goes over it," he said.
Some of the structures have thrusting and some have associated unconformities, according to Peterson. He said the reservoir setting is "not similar to what we're used to seeing in the Gulf of Mexico.
"The remarkable thing that stands out about them is that they are very, very large," he continued. "One qualifier is that although we have several field discoveries based on one or at maximum two wells, that leaves a lot of uncertainty about reservoir conditions.
"There is some question, too, about whether or not we have amplitude anomalies that help to delineate these accumulations."
Industry guesses put the potential of the deep water Gulf at anywhere from 15 billion boe to 30 billion boe. Recent discoveries, including Crazy Horse, haven't changed that sentiment, said Alex van den Berg, exploration manager for Shell in New Orleans.
"I think our view is that it's the same - that range is what we've been looking at all along," he said.
"The real question is whether or not (total deep water Gulf reserves are) going to be as big as the shelf, which is a considerably larger number."
Long cycle times from leasing to drilling and discovery to production could help even out deep water Gulf activity when oil and gas prices bounce up and down. But van den Berg said long cycle times are becoming an exception.
"Cycle-time has been reduced over time to where the opposite is true," he noted. "The longer it takes to bring on a field, the lower the chances are for it to be economic."
He estimated most on-production cycle times at 3-5 years from discovery, though several factors can influence the speed of progress.
"It's hard to give something an average with so many variables in field development," Peterson said. "If you find a nice, big field, how long does it take? The answer is, 'It all depends'."
Falling prices in 1998 had an impact on deep water Gulf leasing interest.
"The lease sale in March '99 was much smaller," Marin said. "We've had some 1,000-tract sales, and I think that one was about 280 tracts."
That still left plenty of tracts to drill, however, and by May the MMS reported 25 deep water rigs drilling in Gulf water depths greater than 1,000 feet.
"Just due to the large number of leases in the deep water that need to be drilled, the amount of drilling activity may have dropped off slightly, but it's not significant," Cooke said.
One exploration wildcard could be the future of the Deepwater Royalty Relief Act, which expires in November 2000.
The act allows the Interior Department to suspend royalty payments on new production from leases in more than 200 feet of water in much of the Gulf, to stimulate exploration. MMS officials have said the act is unlikely to be extended.
Cooke said negotiations continue with Mexico concerning areas seaward of the escarpment, beyond the 200-nautical-mile limit. Those talks may open up a new exploration area, he noted.
Activity in the deep water Gulf has focused on plays in water depths of 1,500-4,000 feet, but interest now is moving into deeper waters, said van den Berg. He sees no practical limit to exploration.
"Water depths that we can explore have to do with the systems we can build to develop the production," he said. "If you can predict what's unusual, you can engineer your way around those things."
The MMS has dubbed the Gulf's deep waters "America's New Frontier," and much of that frontier remains untouched. It extends westward through the Mississippi Fan Fold Belt, the Alaminos Canyon and the Perdido Fold Belt, with emerging exploration areas basinward of the Sigsbee Escarpment.
It's an expanse where the industry sees attractive recoverable-resource projections, as well as promising recent results -- and a whole lot of Gulf to explore.