Miocene Prospects
While Miocene discoveries in the deepwater Gulf grab headlines, GulfSlope Energy Inc. is optimistic about Miocene prospects on the Shelf, where exploration in the play began, says Vice President Brady Rodgers.
Formed in 2013 by several Gulf of Mexico exploration and development veterans, GulfSlope submitted 22 high bids, totaling $7.8 million, on 22 blocks in the Central Gulf lease sale in March. The bids are part of the company’s 98,000-acre position that includes 17 prospects on the Outer Shelf and upper slope in water depths less than 1,000 feet, 50 miles off Louisiana, Rodgers details.
The company is discussing development options with potential partners on five prospects–Graviton, Onium, Photon, Tachyon and Tau–in 450 feet of water, with plans to begin drilling in 2015, he says.
“We are looking at the Miocene on the Shelf,” Rodgers discloses. “It’s the Miocene everybody is used to looking at, but it’s in shallower water.”
Salt folds and fragmentation on the Shelf complicated seismic imaging early on, but research and deepwater developments have improved dramatically, with advancements that include the 2006 introduction of reverse time migration, Rodgers says. In 2013, GulfSlope picked up 2.2 million acres in seismic and reprocessed it with RTM, he says.
BHP Billiton
In 2015, BHP Billiton Ltd. plans to spend $98 million at Shenzi. The company says it continues to operate deepwater Gulf positions such as Neptune as well as Shenzie with a focus on drilling and completing infill wells using deepwater rigs that include the Invictus, which deployed in May.
“At the time, it had not been processed with the latest, greatest algorithm, so we had to pay extra to do that,” Rodgers elaborates. “We reprocessed about half our acreage, and with that we identified a series of prospects. We chased those in the March lease sale.”
Historically, explorers thought the area, known as the flex trend, did not have thick sand, but imaging shows that Shelf Miocene sands and the deepwater Miocene both contain thick potential pays, Rodgers continues.
“Logs you see on the Shelf show sands similar to what you see in deepwater that have been on line 15 to 20 years, so we are using tools and looking back at an area that was very successful in the 1990s, but it has not been drilled and explored to the extent of some of the other prolific areas in the Gulf,” he comments. “We really think it’s target rich.”
Upper Miocene pay thicknesses in producing fields Tanzanite, Mahogany and Hickory are 400 feet, 300 feet, and 150 feet, respectively, he says. Pay thicknesses primarily in the Middle and Lower Miocene range from 300 feet to 450 feet on nearby deepwater producers, Rodgers points out.
Petroleum consultants DeGolyer & MacNaughton analyzed GulfSlope’s prospects and agreed with assessments of 2 billion barrels of oil equivalent over the 17 prospects, he says. Shelf reserves are lower, but economics are far more favorable for GulfSlope, Rodgers points out.
“We don’t have to defend to ourselves that we found 500 million barrels here and it might be 600 million barrels,” he observes. “Instead, we defend to ourselves we found 20 million barrels and it might be 40 million.”
More attractive rig rates–$160,000-$165,000 daily for jack-up rigs versus $500,000 for deepwater drill ships–available infrastructure and other factors make Shelf development costs about 19 percent of those for deepwater Miocene prospects, he says, with more advanced drilling technology available to access multiple and deeper targets.
Platforms in the area can be constructed for $60 million to $90 million, depending on size, Rodgers says. “We need to cover the cost of the $90 million platform, not a multibillion dollar development,” he offers.
Also, Shelf prospects can be brought on line in about three years versus nine years for deepwater finds, Rodgers points out. The company is discussing ventures with potential partners on drilling a well in 2015, he says.
The expertise of the company’s people is a strong selling point, Rodgers says. The industrywide exploration success rate was 33 percent, compared with GulfSlope’s team achieving a 50 percent success rate for its previous employers, which he says include Anadarko Petroleum Corp., BP plc, Shell and others.
