New projects, new technology and new challenges confront exploration and production companies as they reach for the deepest water in the Gulf of Mexico.

From outposts on the frontiers of US offshore exploration, the deepwater Paleogene play (Lower Tertiary) follows the Perdido Fold Belt north out of Mexican water in the western Gulf of Mexico into the southern Alaminos Canyon area, where the Paleogene turns eastward along the Sigsbee Escarpment through Keathley Canyon into Walker Ridge.

The quest
Baha, in Alaminos Canyon 600, drilled in 1996 showed an active petroleum system, but it was up to Unocal (now part of Chevron) to make a discovery with its first Trident well in Alaminos Canyon 903 in 2001. At the time, the well was in the deepest water ever drilled for production at 9,687 ft (2,954 m). It drilled the well to 20,500 ft (6,252 m) in 66 days at a cost of US $34 million. It followed that well with the Trident 2 in 9,727 ft (2,967 m) of water, a record that still stands for a producing well.

Shell followed with its Great White discovery in 2002. The action shifted to the east that year as BHP Billiton registered its Cascade discovery in Walker Ridge 206. The following year, it discovered Chinook in Walker Ridge 469, the same year that Chevron found St. Malo in Walker Ridge 678.

Also in 2003, Chevron drilled its Toledo well in Alaminos Canyon 951 to 10,011 ft (3,053 m), the deepest-water attempt at commercial production, but that apparently was not commercial.

The discoveries kept piling up as Chevron added Tobago, Silver Tip and Tiger in Alaminos Canyon and Jack in Walker Ridge. Total chimed in with its Gotcha discovery in Alaminos Canyon 856. BP also registered success with Stones in Walker Ridge 508.

Refining the play
BP came up with a significant discovery in 2006. It drilled the Kaskida discovery in Keathley Canyon 292, the first Lower Tertiary discovery in the area and a well that linked petroleum systems in Alaminos Canyon to the west with Walker Ridge in the east.

“These discoveries have proven the Lower Tertiary play extends over at least three protraction areas. It may also reach north into Garden Banks and Green Canyon, although as yet no successful tests have been drilled in these areas,” said Zoe Sutherland, Gulf of Mexico analyst with Wood Mackenzie.

To date, 12 discoveries have resulted from 19 wells, a 63% success rate. Perhaps figures from the US Minerals Management Service, administrator of federal leases in the Gulf of Mexico, shed some light on the significance of the play.

“This trend began to materialize in 2001 and 2002 with several discoveries in the Alaminos Canyon and Walker Ridge areas and now has extended to the Keathley Canyon area. The area could be as wide as 300 miles (483 km) and involve as many as 3,000 blocks that MMS administers,” said MMS Director Johnnie Barton.

Following BP’s Kaskida discovery and Chevron’s announcement that its Jack 2 well tested at 6,000 b/d of oil, bidding soared for deepwater Gulf of Mexico blocks at the MMS sale last August.

Largely ignored before the sale, Keathley Canyon drew bids on 82 blocks. BP submitted the highest bid in that sale, US $21 million for Keathley Canyon 58. That area was prime territory. Petrobras bid $12.8 million for Block 59 and Shell bid $6 million for Block 56.

Jack 2
Chevron’s Jack 2 appraisal well was significant for a number of reasons. Its real accomplishments and information generated by the well provided sound building blocks for the future of the Lower Tertiary.

Clearly the most extravagant of the speculations came from press reports that Jack field contained 15 billion bbl of oil and would rival the North Slope of Alaska.

The truth is less impressive. That 15-billion-bbl figure sat at the extreme upper end of estimates of oil in place for the whole Lower Tertiary trend. The lower end of that range was 3 billion bbl.

Still, before Jack 2’s production test, 99% of the proved reserves in the Gulf of Mexico were from Upper Tertiary Miocene and younger. And until that test, the 1% of Jurassic and Cretaceous discoveries was close to shore off Louisiana and Alabama.

Chevron explained some of Jack 2’s records in Walker Ridge 758. It drilled the well in 7,000 ft (2,135 m) of water to 28,175 ft (8,592 m) and then conducted the deepest-water well test in history as it tried to evaluate part of the pay zone. The well tested at 6,000 b/d from approximately 40% of the total net pay interval.

The well also set records for test equipment depth, pressure and test duration in deep water. Perforating guns were fired at record depths in record pressures. The test tree and drillstem test-tool use helped Chevron set a record for the deepest extended drillstem test in the deepwater Gulf of Mexico.

Development
Now the industry is setting up a potential three-way race to see which company brings on the first production from the Lower Tertiary trend.

Shell plans to produce through its Perdido regional development hub in Alaminos Canyon 857 over its Great White discovery. The production area covers 61¼2 blocks. It also will produce Shell-operated Tobago field in Alaminos Canyon 859 in 9,627 ft (2,936 m) of water and Silvertip in Alaminos Canyon 815 in 9,226 ft (2,814 m) of water.

That truss spar — deepest spar production in the world — is scheduled to come on stream at the turn of the decade, probably in 2010 with a capacity of 100,000 b/d of oil and 200 MMcf/d of gas.

Practically next door at Gotcha, Total is working with Heerema’s INTEC on a pre-front- end-engineering-and-design contract for the subsea portion of the contract. Total selected EXMAR Offshore as the main engineering contractor. Although it doesn’t mention the contracting party, EXMAR said it will build a semisubmersible production platform with a Mustang Engineering topsides based on its OPTI-6000 hull. The platform, to be called the OPTI-EX, will be complete and ready for installation in the first quarter of 2009 with a capacity of 40,000 b/d of oil and 50 MMcf/d of gas.

Meanwhile, in Walker Ridge, Petrobras, Devon and Total bought out BHP’s share of Chinook and Cascade, and they plan to install the Gulf of Mexico’s first floating production, storage and offloading (FPSO) vessel to produce both blocks. According to Petrobras, the companies plan to start production by the end of 2009.

That FPSO will have some innovative technology for the Gulf of Mexico, according to Petrobras.

According to Wood Mackenzie’s Sutherland, “Operating in this environment is high risk and costly. Current high rig rates mean it’s hard to get change from $100 million to drill a well. Any attempt to put a figure on a production forecast from the Lower Tertiary beyond this would be pure speculation at the moment. What is certain, the upstream playground in the Gulf of Mexico has just gotten a lot bigger.”