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Devon eyes 2009 startup for Cascade Gulf of Mexico 2002 Walker Ridge discovery could be first Lower Tertiary find to be developed; FPSO being considered for field Ray Tyson For Petroleum News
Cascade, the first of four significant Lower Tertiary oil discoveries in the Gulf of Mexico’s Walker Ridge area, likely will be the first among a dozen announced finds in the Gulf’s entire massive Lower Tertiary trend to see first oil. “It’s the leading candidate for the first production of (the) Lower Tertiary,” said Stephen Hadden, senior vice president of exploration and production for big E&P independent Devon Energy, a major stakeholder in Cascade.
In fact, Devon and its 50-50 Cascade partner, Brazil’s Petrobras, already are laying the groundwork for field startup in 2009, Hadden said, also noting in a conference call with industry analysts that the partners are weighing development options for Cascade which could see the U.S. Gulf’s first FPSO, or floating production, storage and offloading system.
“We not only acquired early knowledge from this discovery, but also gained some early confidence in the play,” Hadden said. The Cascade discovery was announced in 2002.
Lower Tertiary prospects boosted by Jack production tests Cascade and the other Lower Tertiary discoveries and prospects in the U.S. Gulf received a huge lift in September following conclusion of a highly successful production test on Walker Ridge’s Jack discovery. It was the first flow test ever conducted on the U.S. Gulf’s emerging Lower Tertiary, and no doubt was among the upstream industry’s most closely watched events.
The flow test evidently proved that the Lower Tertiary has the proper rocks and other reservoir characteristics required for commercial production from this deep horizon, which stretches several hundred miles from Walker Ridge westward through Keathley and Alaminos canyons.
“We captured confidential reservoir data while the reservoir was in a flowing state and a build-up state,” Hadden said. “This gave us detailed reservoir information and detailed insight into the flow performance and the potential commercial performance of a well in the Lower Tertiary.”
Companies have MMS approval for E&P unit Devon and Petrobras, which recently increased their working interests in Cascade, already have received approval from the U.S. Minerals Management Service to form a 23,000-acre E&P unit that prevents exploration encroachment on the prospect while authorizing commercial development of the unit. “We did that (increased interest) based on the confidence we continue to gain in the Lower Tertiary,” Hadden said.
The partners are currently seeking MMS approval for a deepwater operating plan to drill two additional wells — another sidetrack off the Cascade No. 2 well and a first well into an untested fault block that would become the Cascade No. 3 well. “Both those wells will be drilled and completed,” Hadden said.
Thus far drilling has uncovered 450 to more than 500 feet of net hydrocarbon pay, ranking Cascade in the top tier of all deepwater Gulf discoveries. “We confirmed rock and fluid properties in different areas of the reservoir,” Hadden said. The Cascade discovery well was drilled to a total depth of around 28,000 feet, including about 8,200 feet of water column.
Production could be tied back to FPSO Hadden said Devon and Petrobras are considering a “production scheme” for Cascade that includes two subsea wells tied back to an FPSO, where the oil would be processed, loaded aboard ocean-going tankers and transported to shore. FPSOs are commonly used in other deepwater regions of the world where pipelines are scarce, but have yet to make their debut in the U.S. Gulf. MMS approved FPSOs for use in the Gulf more than four years ago, after several years of intense lobbying by a U.S. offshore industry looking for alternatives to expensive subsea pipeline systems.
Facility costs for the two-well development scenario at Cascade would cost $250-to $400 million and the FPSO could be leased, Hadden said, noting that production wells for any development option would cost $80-to $120 million each, “and all these are in current dollars.”
An “expandable” facility option that would accommodate additional wells, depending on reservoir performance, would cost $600-to $800 million, including subsea risers, manifolds, umbilicals and FPSO, Hadden said.
And then there is a “large field” development that could be anchored by a large field, requiring a large floating production and drilling facility. Facility costs, excluding the $80-to $120 million in individual well expense, would range from $1.3-to $1.5 billion, Hadden said.
“Finally, if several of these fields were located in close proximity to each other, the multi-field development option might be pursued,” he added. “This would provide additional cost synergies where we could tie these additional platforms, or these additional floaters, to a central floating, storage and offloading facility to handle the crude.”
In addition to its 50 percent stake in Cascade, Devon’s Lower Tertiary discovery portfolio in Walker Ridge includes a 25 percent interest in Jack and a 22.5 percent interest in St. Malo. Devon also holds a 20 percent working interest in industry’s latest Lower Tertiary discovery, Kaskida, located in the Keathley Canyon area. Thus far Devon has been successful in four of six exploration wells drilled into the Gulf’s Lower Tertiary.
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