Discoveries confirming vast lower tertiary oil play

Two Gulf ‘ultra-deepwater’ discoveries announced, Jack well data under review; Sardinia prospect well spud July 4, drilling ahead at 19,000 feet

Ray Tyson

Petroleum News Houston Correspondent

A pot load of useful information is said to have come from the St. Malo appraisal well, apparently shedding more light on a far-reaching, geologically deep horizon that’s rapidly transforming the remote southern portion of “ultra-deepwater” Gulf of Mexico into one of the hottest oil plays in the region.

Devon Energy and its partners already have scored important lower tertiary discoveries at St. Malo and Cascade and are currently reviewing well data from the Jack well, which Devon said has been temporarily abandoned pending outcome of the review.

The companies also are in the process of drilling an exploratory well at the Sardinia prospect, another lower tertiary test headed to a target depth of 29,000 feet. The well was spud July 4 and is currently at about the 19,000-foot level, Devon said.

Devon’s interest in the lower tertiary play alone is impressive, extending some 140 miles from Cascade in Walker Ridge west to Sardinia in Keathley Canyon.

“If this momentum continues to gather in the lower tertiary trend, it will be a very significant growth driver for Devon for many years to come, Larry Nichols, Devon’s chief executive officer, declared in an Aug. 5 conference call with industry analysts.

While the partners continue to evaluate data from the St. Malo appraisal well, he added, “our optimism is growing” for the prospect and the region.

“More important is the implication for Devon’s prime acreage and prospect position in the emerging lower tertiary trend,” Nichols said.

Devon holds interests in more than 200 blocks, or greater than 500,000 net acres, in the Alaminos Canyon, Keathley Canyon and Walker Ridge areas.

St. Malo Devon’s third discovery

With completion of the Jack well at Walker Ridge Block 759, Devon earned a 25 percent stake in 71 additional deepwater blocks under a previous agreement with owner ChevronTexaco to participate in the drilling of four deepwater exploration wells. Jack was the final well in the program.

Devon holds a 22.5 percent working interest in St. Malo. Unocal is the operator with a 28.75 percent working interest. Petrobras holds a 25 percent stake in the prospect, followed by ChevronTexaco with 12.5 percent, EnCana with 6.25 percent, ExxonMobil with 3.75 percent and Eni with 1.25 percent.

Devon President John Richels said “a tremendous amount of data” was collected from the St. Malo appraisal well a mile east of the initial discovery on Walker Ridge 678. The discovery logged a robust 450 feet of net oil pay, while the appraisal encountered 400 feet of net.

“The technical teams are reviewing the data and determining what the next move will be,” he added. Specific results from the St. Malo appraisal were not disclosed by Devon.

However, Richels said Devon at least expects to participate in an appraisal well at Cascade late this year or early next year, which could shed additional light on the extent of the massive lower tertiary play.

The company said the partners should have a better idea of the region’s true oil potential following review of well data from Jack and drilling results from Sardinia.

Nevertheless, Devon is now saying that development of oil discoveries in the area could begin as early as 2008, although the company said the partners continue to weigh development options, including the possible use of a floating production system.

“The pieces of the puzzle are still coming together,” a Devon official said. “However, I think a lot of that depends on how many discoveries are out there.”

The St. Malo appraisal was a re-entry and deepening of a dry hole drilled in 2001, which was drilled to a shallower objective. The appraisal was deepened about 2,000 feet to a total depth of 28,903 feet. The prospect is located in roughly 7,000 feet of water.