It's now official:
In the Gulf of Mexico, deepwater exploration is THE name of the
of the shift can be tracked to early 2000, when more oil was first
produced from the deepwater Gulf than from the shallow water margins.
Deepwater production continued to grow, and today is fast approaching
the all-time shallow water Gulf record set in 1971.
drilling also has dramatically expanded in recent years, and deepwater
fields today account for some of the largest hydrocarbon accumulations
ever found in the prolific Gulf. MMS defines "deepwater" as wells
drilled in 1,000 feet or more of water.
is official, however, because of the recent Minerals Management
Service report titled "Deepwater Gulf of Mexico 2004: America's
Expanding Frontier," which outlines the play's last decade of growth
-- and its role in the future.
to the report, deepwater reserves today far out-pace the shelf,
and the deepwater field sizes are much more significant than the
shallow water. During the last 10 years the average shallow-water
field added about five million barrels of oil equivalent of proved
and unproved reserves, while the average deepwater field added over
86 million barrels of proved and unproved reserves.
deepwater oil production accounted for approximately 61 percent
of the overall Gulf of Mexico production -- and operators are continually
expanding the footprint of deepwater exploration.
production began in 1979 at Shell's Cognac Field, although it took
another five years before the second deepwater field, Exxon's Lena
Field, came on line. Despite that early activity, it wasn't until
the 1990s that deepwater activity exploded:
Today, 54 percent of the approximately 7,800 active leases in
the Gulf are in deep water, up from 27 percent of the approximately
5,600 total active leases in 1992.
average, there were 29 rigs operating in deep water last year,
compared to only three rigs in 1992.
oil production rose over 840 percent, and deepwater gas production
rose about 1,600 percent from 1992 to 2002.
February 1997 there were only 17 producing deepwater projects
in the Gulf, up from just six at the end of 1992. By the end of
2003 there were 86 producing projects in the deepwater Gulf --
a 51 percent increase in just two years.
production rates have risen by over 100,000 barrels of oil and
400 million cubic feet of gas per day since 1997.
activity is often a harbinger of exploration activity in the deep
water, and today the 3-D seismic footprint is vast. Seismic acquisition
has stepped into progressively deeper waters since 1992 and today
blankets most of the deepwater region, even beyond the Sigsbee Escarpment.
depth migration of seismic data also has greatly enhanced the interpretation
capabilities in deep water, particularly for areas below salt canopies.
Once used sparingly, pre-stack depth migration surveys now are numerous
-- and widespread use of the technology is pushing exploration,
as evidenced by subsalt discoveries like Mad Dog, Thunder Horse,
Atlantis and Tahiti.
time-lapse seismic surveys will be an important advancement in deep
water. According to the MMS the high cost of drilling deepwater
wells and challenges associated with re-entry of deepwater wells
may promote the use of 4-D technology in the deepwater Gulf.
is another indicator of activity.
leasing activity slowly increased from 1992-95, but immediately
following the Deep Water Royalty Relief Act, deepwater leasing exploded.
contributed to this activity, of course -- including improved 3-D
seismic data coverage and several key deepwater discoveries -- but
the royalty relief certainly had an impact. In 1992 leases in water
depths greater than 2,625 feet, where the greatest royalty relief
was available, only accounted for 3 percent of leases; by the end
of 1998 that figure had grown to almost 70 percent.
the number of active deepwater leases surpassed that of shallow-water
experienced a lull in leasing activities in 1999 -- almost a four-fold
decrease compared with 1998 levels -- but interest rekindled in
late 1999 through 2003. The major oil companies dominated deepwater
leasing in 1992-93, but by 1996 non-majors began acquiring significant
lease holdings, a trend that continued through last year.
companies are poised to play a leading role in the future of the
deepwater Gulf, according to the MMS.
ahead, 10-year deepwater lease expirations will significantly impact
deepwater activity, the report said, as the availability of expiring
blocks is expected to dramatically increase in 2006 as a result
of the 1996-98 leasing boom.
expiration projections, according to the report, will pressure leaseholders
to drill and evaluate their holdings and will provide opportunities
for other companies to enter an active play by acquiring leases
as they expire or by obtaining farm-outs from companies with untested
acreage, the agency indicates.
of deepwater wells drilled generally increased from 1992 through
2001. Activity declined in 2002 and 2003, but considerable drilling
activity occurred in water depths greater than 7,500 feet.
well in over 10,000 feet of water began drilling late last year
at ChevronTexaco's Toledo prospect in Alaminos Canyon block 951.
multiple exploration trends that will continue to enhance the importance
of the deepwater province. Exploration drilling in the deepwater
Gulf of Mexico in 2002 and 2003 found over two billion barrels of
deepwater mini-basin plays are still providing many exploration
opportunities, the MMS report notes, but recent discoveries in new
deepwater plays continue to expand the deepwater's exploration potential.
not a geologic play, the Gulf's ultra-deepwater areas also can be
considered frontier territory, according to the MMS. During the
last three years there have been 11 industry announced discoveries
in more than 7,000 feet of water with volumes of more than 1.75
billion barrels of oil equivalent.
discovered in 2001 in over 9,800 feet of water, is the deepest of
these discoveries, and was found in 2001.
drilling results indicate very significant production volumes in
the near future from the deepwater Gulf. According to the MMS report,
the deepwater region is still an immature exploration province with
many large fields awaiting discovery.
assessment report indicated the deep water is expected to have ultimate
reserves of approximately 71 billion barrels of oil equivalent,
of which 56.4 billion barrels remain to be discovered. This compares
to shallow water ultimate reserves of about 65 billion barrels of
oil, of which 15.2 billion remain to be discovered.
water oil production has steadily declined since 1997, and by the
end of 2002 was at its lowest level since 1967. In contrast, deepwater
Gulf production is dramatically increasing today -- similar to the
trend seen in the shallow water Gulf during the 1960s -- and some
predict this production surge has not yet peaked, the MMS report
In 2002 deepwater oil production accounted for about 61 percent
of overall Gulf oil production.
Shallow water gas production rose sharply in the 1960s and '70s,
then leveled off for the next 15 years before declining steadily
(While deepwater gas production has not seen the same dramatic
jump as oil production, a steady increase has offset the shallow
Recent subsea completion technology has driven new deepwater
developments, helping to increase production from the region.
Approximately 300,000 barrels of oil and two billion cubic feet
of gas per day come from deepwater subsea completions, according
to the MMS, accounting for about 30 percent of deepwater oil
production and about 50 percent of deepwater gas production.
Deepwater gas production from subsea completions began in early
1993, and by mid-1994 they accounted for over 40 percent of
the total deepwater gas figures.
Subsea gas completions increased from 1996 through 1999, remained
constant in 2000, and again increased rapidly after 2000.