GoM Update: Old Dogs Still Going Strong

America’s recent ascent to the high-level status of a hydrocarbon producer worthy of a significant presence on the world stage of leading producers stems from something new and a rebirth of something old.

The new is the still-increasing number of shale oil and shale gas plays that have been quite the industry game changer in and of themselves.

The old is aptly exemplified by a couple of long-familiar regions: the Gulf of Mexico and the Permian Basin.

These old dogs still hunt.

Shell’s Olympus platform (foreground) and Mars platform (background) in the Gulf of Mexico. Photo courtesy of Shell
Shell’s Olympus platform (foreground) and Mars platform (background) in the Gulf of Mexico. Photo courtesy of Shell

The once-again renewed activity in the long-producing Permian Basin, is targeting not just new shale plays but conventional sources using new technology in large part. Even so, successful vertical drilling is on par with laterals.

The historic high profile Gulf of Mexico, like the Permian, has experienced more than one life since the first offshore well was drilled in 1938.

At times through the years, the Gulf has been somewhat reverentially referred to as the backbone of America’s oil and gas production.

Such thinking has been sporadic.

As recently as the late 20th century it was derided as the “dead sea,” a moniker incurred by the lack of E&P owing to what was perceived to be a dwindling resource base particularly in the readily accessible shallow water region.

Following this somewhat lengthy quiescent period, activity revved up impressively.

The deep offshore waters and even deeper subsurface hydrocarbon-bearing zones became economical to tap into as technology advances for seismic drilling completion and more made a lot of activity possible and economical, such as deeper drilling and completions.

Then the virtual lightening bolt, aka the Macondo blowout, hit in 2010, and essentially everything in the Gulf that was industry-related came to a screeching halt owing to the ensuing moratorium dictated by the U.S. government.

Ironically, this led in part to the current resurgence in the Permian. Many operators had to put their GOM budgets to work somewhere, and the Permian was just waiting for more drill bits to go down to dip into its significant reserves.

The Resurgence

Today, GOM activity is back in full swing, albeit with numerous new regulatory guidelines and restrictions in place.

Operators are eagerly chasing the estimated 48 billion barrels of oil yet to be discovered, according to the U.S. Department of the Interior.

Industry research company Wood Mackenzie reportedly is estimating deepwater output equivalent of almost two million bopd in 2020.

Even for die-hard industry workers, this is particularly amazing when one considers how challenging, risky and expensive the deepwater environment is for operators.

Drilling a duster can punch a giant hole in the company budget. But a successful discovery is a whole other story.

In one of many examples of the latter, veteran deep water Gulf operator Shell announced yet another successful exploratory Vicksburg well in 2013, 75 miles offshore in the DeSoto Canyon Block 393 in 7,446 feet of water. It reached TD of 26,385 feet.

The Jurassic-age Vicksburg “A” discovery is estimated to hold potentially recoverable resources of more than 100 MMboe, according to AAPG member Mark Shuster, executive vice president of exploration for Shell Upstream Americas.

This is a significant addition to the 500 MMboe of potentially recoverable resources already discovered and appraised at the nearby Appomattox and Vicksburg “B” discoveries.

Like its peers, the company is hard at work in varied GOM locales. It recently announced the start of production from the deepwater Mars B field development program via Olympus, which is the largest floating, deepwater platform in the Gulf.

Combined future production from Olympus and the original Mars platform is expected to deliver an estimated resource base of one Bboe, according to Shell.

The Mars field was discovered in 1989, with production kicking off in 1996. Such lengthy time spans are the norm for these complex programs in the deep water.

There is considerable excitement over the Stones project Shell is developing. The field is in the Walker Ridge area about 200 miles offshore Louisiana in water approximately 9,500 feet deep.

It will include the use of Shell’s first FPSO in the Gulf, which is said to be the deepest-water FPSO unit worldwide.

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Emphasis: Offshore Developments