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Finding new hydrocarbons in old fields is not a thing of the past.
The most unconventional concept in oil and gas today may actually be quite conventional.
In an era where service companies tout the latest must-have technology and publicly held oil and gas firms promote headline-grabbing shale plays to hungry investors on Wall Street, it surprises many that the best opportunities for "new" liquids reside in legacy conventional fields.
No doubt you've heard this before: The best place to find oil is where oil has already been found.
But a lesson in that exercise is unfolding on the Gulf shelf and in the state and inland waters along the Louisiana coast where both public and private companies are picking up legacy properties; using reprocessed or advanced 3-D seismic to identify bypassed oil; and employing sidetracks from existing well bores, recompletions, through-tubing plug backs, or just drilling new wells to tap production and book reserves previously overlooked or hidden behind-pipe in multiple stacked reservoirs.
Much of this bypassed pay is originating from fields that were old enough to have qualified for Social Security long ago.
The concept is not new. After gas prices collapsed in Canada in 2006, several junior oil and gas companies began adapting technology developed in unconventional gas and applying it to conventional oil targets. That brought about a renaissance in the Canadian industry at a time when things looked quite bleak. Now that business model is finding a home in the Lower 48.
As a result, new opportunities are unfolding in old fields: Greater Bay Marc-hand, Grand Bay, Lake Washington, Main Pass, Breton Sound, and West Cote Blanche Bay, to name a few.
Some of those fields were discovered by the majors from the late 1930s through the 1950s. The majors collected hundreds of millions of barrels in low-hanging fruit until larger targets in deeper waters or overseas enticed them away and they sold out in the 1990s. A second wave of transactions on the shelf and in coastal waters occurred over the last half-decade.
Today, companies like Energy Partners Ltd., Energy XXI, SandRidge Energy, Swift Energy, and Saratoga Resources find that these older fields respond favorably to leading-edge technology as they apply reprocessed 3-D seismic and new completion techniques to reverse production declines.
Saratoga Resources, for example, acquired a suite of properties that included the 70-year-old Grand Bay field discovered by Chevron predecessor Gulf Oil. That field had produced 258 MMboe. Saratoga resampled the first second of the seismic data, painstakingly relogged existing wells, and carefully mapped the vagaries of 64 separate reservoirs in the stacked vertical play. Within a couple of years, production grew from 2,300 Boe/d to 4,000 Boe/d and appears on the way to exceed 5,000 Boe/d by year-end. Granted, this isn't Prudhoe Bay. For example, Energy Partners Ltd. and Saratoga are less than 13,000 Boe/d combined in just a couple of coastal water fields. Then again, payouts can come as soon as six months on projects that earn premium Louisiana Light Sweet crude pricing, proving the adage that what goes around also comes around.