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Come-back-kid Marathon chalks up discoveries in deepwater Gulf
Marathon Oil Corp. has steadily crawled back from a less-than-stellar exploration performance in deepwater Gulf of Mexico, posting worthy discoveries and farm-ins over the past several years as an operator or participant, including its latest find, the 100 percent Marathon-owned and operated Droshky oil prospect on Green Canyon Block 244.
The Droshky No. 1 discovery well, located 137 miles south-southwest of Venice, La., was drilled in about 2,900 feet of water to a total depth of 21,190 feet, encountering “high quality oil-bearing reservoirs” containing an estimated 250 feet of net oil pay, Marathon announced in April.
Since, the company said a sidetrack appraisal well downdip of the discovery encountered more than 600 feet of net pay, truly a sizeable find by deepwater Gulf of Mexico standards. The company’s next operation on Droshky will be to drill a lateral appraisal sidetrack well, which will complete the appraisal process, followed by an engineering development study, the company said.
“The preliminary results suggest that Droshky No. 1 is a commercial discovery,” Philip Behrman, Marathon’s senior vice president of worldwide exploration, said after the initial discovery and before information was released regarding Marathon’s first appraisal well.
He said production from Droshky, previously called Troika Deep, likely would be through the offshore Troika Unit infrastructure, about two miles from the discovery well. Marathon holds a 50 percent interest in the unit.
Gulf core producing area The Gulf of Mexico continues to be a core producing area for Marathon, with interests in seven producing fields and eight platforms, of which Marathon operates four. Today the company’s primary deepwater are focused on Angola, Indonesia and the Gulf of Mexico.
However, four years ago Marathon’s deepwater exploration record in the U.S. Gulf was so dismal — at least six consecutive dry holes — it caused the company’s president and chief executive officer, Clarence Cazalot, to declare in the spring of 2003 that while Marathon would remain a deepwater player in the Gulf, it would “de-emphasize” the region in favor of more successful offshore drilling ventures in Angola and Nova Scotia.
Among Marathon’s Gulf dusters were Komodo, Barracuda, Kansas, Paris Carver, Flathead and Timber Wolf. “It looks like they have lost their exploration prowess in the Gulf,” Robert W. Baird analyst George Gaspar commented in a March 2003 interview. Marathon acknowledged its deepwater shortcomings in 2002, pledging that a new management team would bring improvements to the company’s upstream business. However, in the months following the management change, Marathon drilled three of its consecutive dry holes: Komodo, Barracuda and Kansas.
“They’ve had a string of dry holes that begs questions about the petroleum engineering and geological and seismic assessments they are getting,” Gaspar said in 2003.
Recent significant discoveries Marathon, with the help of various partners, came roaring back with a number of significant discoveries, including the BP-operated Stones lower tertiary discovery in Walker Ridge and the BHP-operated Neptune discovery situated in the prolific Atwater Foldbelt play, which has spawned such titans as Atlantis and Mad Dog.
In 2005, Neptune owners agreed to chip in a total of $850 million to develop the field. The offshore production facility was nearly 70 percent complete by the end of the 2007 first quarter, with first production expected in early 2008. Fabrication of the hull, topsides and subsea components is continuing, with offshore installation expected to begin this month. Neptune has estimated recoverable reserves of 100 million to 150 million barrels of oil equivalent.
The Stones discovery, while years away from possible development, is significant because it helped confirm the vastness of the lower tertiary horizon, considered to be the hottest play in deepwater Gulf.
Marathon also continues to score abroad. During the 2007 first quarter alone, the company announced three discoveries offshore Angola: Caril, Manjericao and Miranda.
However, despite the exploration rebound, Marathon’s U.S. upstream income fell to $150 million in the first quarter of 2007 from $245 million in the first quarter of 2006. The company attributed the decline primarily as a result of revenue decreases from lower liquid hydrocarbon and natural gas sales volumes and realized natural gas prices.
Normal production rate declines, particularly for Marathon’s Gulf of Mexico properties, accounted for the majority of the volume decrease, the company noted.
—Ray Tyson
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