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Marco Polo falls short of production goal Anadarko says it may have to drill more wells or reduce booked reserves at deepwater GOM field; facilities designed as hub for future satellite finds Ray Tyson Petroleum News Houston Correspondent
Anadarko Petroleum is facing a possible write down of booked oil reserves at its Gulf of Mexico Marco Polo field, which the company said is not performing according to expectations.
Marco Polo, which came on stream in July with an initial three wells, is the big independent’s first deepwater discovery in the U.S. Gulf. Offshore facilities were designed to serve as a hub to accommodate future production from satellite discoveries, which now include K2, K2 North and possibly Genghis Khan.
The field, with all six production wells on line by the end of October, reached peak production of 42,000 barrels of oil equivalent production per day, below the forecasted peak of around 50,000 barrels per day.
“Production pressures from the wells are not holding up as expected,” Jim Hackett, Anadarko’s chief executive officer, said in an Oct. 29 conference call with industry analysts.
If the wells do not stabilize, he added, it likely means the Marco Polo field is more “compartmentalized” than seismic imaging and pressure tests initially indicated.
“Continued monitoring will tell us whether we need to drill more wells to get booked reserves, or it could require revision of reserves that we booked on the best data available back in 2002,” Hackett said.
The 100 percent Anadarko owned Marco Polo field, located in more than 4,000 feet of water, was discovered in April 2000 and is located on Green Canyon Block 608 about 160 miles south of New Orleans, La.
In its conference call, the company declined to discuss reserve estimates for Marco Polo, saying only that initial volume estimates were reviewed by an independent reservoir consultant based on seismic studies and the drilling of several wells to confirm the structure.
“So we know the oil is there (and) we know the sands are where we said they would be. Then (we) used those volumetrics to estimate how much oil is in place,” said Mark Pease, Anadarko’s senior vice president of exploration and development.
He said the company then used the production histories of “typical” Gulf of Mexico fields in the region to determine how much of the in-place oil at Marco Polo could be recovered. SEC generally requires flow test to surface However, none of the Marco Polo wells actually was flow tested to the surface and “that was the subject of a lot of discussion” with the U.S. Securities and Exchange Commission, Hackett conceded. “We were trying to go through the definition of what you need offshore.”
Although Hackett did not elaborate on the company’s talks with the SEC, agency rules generally require a flow test to the surface to help establish a field’s recoverable reserves. However, because of the time and expense, explorers rarely conduct flow tests on deepwater discoveries and often use a down hole tool called a Modular Dynamic Tester, or MDT, to help measure well pressure.
“The type of pressure support and response that we’re looking for you would not have seen in a short-term flow test,” Pease said. “You would not have seen that for three to four months.”
He said it would take another two to three months of production history on recently completed wells before the company could determine the exact cause of the pressure drop at Marco Polo.
“We’re going to learn a tremendous amount more about how those things perform over the next few months,” Pease said. Anadarko believes K2, K2 North larger than Marco Polo However, he said that even when considering the worst case scenario at Marco Polo, production from the K2 and K2 North satellites would more than offset production losses at Marco Polo. They are scheduled to come on stream in the middle of next year.
“As we continue to do more drilling … we have seen that K2 and K2 North are going to be a much bigger field than we ever thought Marco Polo was,” Pease said.
Anadarko does not expect pressure problems at K2 and K2 North, in part because they are situated farther down on the structure and are not as geologically faulted as Marco Polo. “So we don’t expect those reservoirs to behave similarly,” Pease said.
In late July, there were five wells down at K2 and K2 North, each capable of producing from 5,000 to 10,000 barrels of oil per day. That means the two fields could provide an average 25,000 to 50,000 barrels per day of production.
Marco Polo’s floating production facility, which is owned by GulfTerra and CalDive and operated by Anadarko, was built to handle 120,000 barrels of oil a day and 300 million cubic feet of gas a day. So there is plenty of room to handle K2 North and K2, as well as another potential satellite called Genghis Khan, the company said.
Deep waters of the Gulf of Mexico represent a significant component of Anadarko’s growth strategy. In fact, Anadarko said several months ago that its U.S. Gulf program was expected to be the single largest contributor to the company’s targeted 5 percent to 9 percent annual growth rate through 2009.
Anadarko is still holding to its overall production forecast, despite the apparent setback at Marco Polo. In addition to K2 and K2 North and what Marco Polo already has contributed to company growth, production increases are expected from the company’s enhanced oil recovery program in Wyoming, as well as in West Texas and Louisiana’s Vernon play where “we are doing a lot of good drilling,” Pease said.
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