SEARCH our ARCHIVE of over 14,000 articles
Vol. 10, No. 23 Week of June 05, 2005
Providing coverage of Alaska and northern Canada's oil and gas industry

Explorers choke on salt

Image-distorting salt layers in Gulf pose problems, delays, as drillers go deeper

By Ray Tyson

Petroleum News Houston Correspondent

For years, explorers have struggled with finding new oil and gas fields beneath the massive, seismic image-distorting salt layers that cover much of the Gulf of Mexico. But the problem appears to be getting much worse, even resulting in planning delays as companies pursue deeper targets that lay many thousands of feet below the salt.

Exploration and production independent Kerr-McGee and major energy company BP are two deepwater explorers, regardless of the difference in their size, that fight the U.S. Gulf salt barrier on a daily basis.

David Hager, Kerr-McGee’s senior vice-president of exploration and production, said May 25 at the UBS Global Oil & Gas Conference in Austin, Texas, that “more than anything it (salt) has … slowed down the pace of prospecting in the deepwater Gulf.”

Eyton says deepwater Gulf three times more costly

David Eyton, BP’s vice president of deepwater developments for the U.S. Gulf, told industry analysts at the same conference that compared to many offshore areas, including West Africa’s Angola, explorers operating in deepwater U.S. Gulf likely spend three times the cost of finding and appraising a deepwater discovery.

“The time scale for proving up these basins in the Gulf of Mexico is very long, and the reason is it is probably the most difficult geology in the world,” he said. “So you have to be very good at seeing though the salt and continuously improving that capability.”

For example, BP’s Atlantis and Mad Dog discoveries are two major deepwater discoveries in the U.S. Gulf that are partially obscured by salt.

“BP intentionally approved both of those developments (only) on the basis of what it could see,” Eyton said.

He said that while the “large scale” of a structure can often be seen through seismic imaging, “the exact definition of how that would play out in the reservoir and where the various sands” are located can be “extremely difficult to see.”

Moreover, with increasing water depths and increasing drilling depths in the U.S. Gulf, plus the problem of figuring out what looms below the salt, “the costs are obviously challenged because you have big wells that cost more,” Eyton said.

Data processing shops backed up with deepwater prospects

Kerr-McGee’s Hager said the company’s data processing shops “are very backed up” on deepwater prospects, causing a slowdown in the whole planning process.

“I think the biggest challenge that we face in industry is primarily around the imaging of these large new wildcat opportunities,” he added. “It’s a very time consuming process and, frankly, I feel there’s quite a bit of backup occurring out there.”

Hager said there is a big difference between “capturing” those wildcat prospects and getting them to the drillable stage, which requires financial commitment.

“So that’s the nut we need to crack more than anything,” he said of the U.S. Gulf’s salt barrier. “The whole industry is struggling, I think, to some degree to get the cycle time moved up on the data and have the confidence to drill the wells.”

However, today’s deepwater explorers, even when teaming up with other companies on a prospect, are said to be reluctant to invest in an exploration well that can cost up to $50 million or more before having the best geological data in hand.

“Somehow we need to figure out how to improve the imaging on these prospects, and improve the turnaround on the processing to get the pace of exploration moved forward,” Hager said.

Kerr-McGee, a highly successful independent explorer in deepwater U.S. Gulf, is hoping next year to drill its first exploration well into the geologically deep Eocene or lower tertiary trend, among the hottest plays in the “ultra-deepwater” Gulf of Mexico.

“We’re interested in that play (and) think it is a viable play,” Hager said, “and possibly next year you’ll start seeing some wells showing up on our schedule in that play type.”

However, he said Kerr-McGee has no intention of placing all its bets on the promising but risky lower tertiary, located roughly 28,000 feet below sea level in water depths ranging up to 10,000 feet.

“We think it’s appropriate from a risk reduction strategy to not have all of our prospects in any one play type, because history tells us that some of these play types work and some don’t,” Hager said. “So we think it’s appropriate to have exposure to multiple plays from a geological perspective in the deepwater Gulf.”

BP: 1/3 to 1/2 international exploration budget tied up in Gulf

Between a third and a half of BP’s worldwide exploration dollars are invested in the U.S .Gulf, resulting in major discoveries over the years that include Thunder Horse in Mississippi Canyon, the largest find ever in the US Gulf at roughly 1-billion barrels.

In the U.S. Gulf, BP explorers strictly for giant oil and gas fields in excess of a quarter-billion barrels of reserves, Eyton said.

“The majority of what we’re now looking for is entirely sub-salt,” he said. “So you need to have some of the best seismic technology in the world to be able to peer through salt, to figure out what goes on underneath.”

Kerr-McGee’s Hager said that transitioning to the “new prospect type,” which is located in deeper geological sections like the Eocene, is one of industry’s biggest problems in the U.S. Gulf.

“It’s us getting the data, plus all of our partners getting the data, and then getting an alignment (partnership) around a $40 or $50-million well which is the biggest challenge, not only for us, I think, but for the whole industry out there,” he said.

Did you find this article interesting?
Tweet it
Digg it
Print this story | Email it to an associate.

Click here to subscribe to Petroleum News for as low as $69 per year.

Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] --- ---

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©2013 All rights reserved. The content of this article and web site may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.