McMoRan Exploration Co. has detected buried treasure at its ultradeep Davy Jones prospect on the Gulf of Mexico shelf. The prospect covers 20,000 acres and is a monster of the deep, potentially one of the largest discoveries in decades on the Gulf of Mexico shelf. On seismic, it appears as one, big uniform structure.

The company hit high-quality Eocene Wilcox sands at depths below 28,000 feet on shallow-water South Marsh Island Block 230.

Some analysts think the prospect could contain at least 2 trillion cubic feet equivalent of reserves.

“The whole landscape of the subsurface geology of the shelf is being reshaped,” said Jim Bob Moffett, co-chairman of the board, in a conference call. “This well is 100-plus miles south of any control in the deep Wilcox, and it’s 125 miles north of the deepwater Wilcox play.”

The 28,263-foot Davy Jones borehole cut 135 net feet of hydrocarbon-bearing sands in four Wilcox zones. One zone is 50 feet thick, and another 40 feet, and they are full to base. From log data, the reservoirs appear exceptional in quality.

“They look like Miocene sands,” says Moffett. “We have somewhere in excess of 20% porosity. Resistivity in these sands is anywhere from 10 to 20 ohms, which is the best resistivity of any of the sands we’ve seen in the Wilcox.”

McMoRan is still drilling the well—it plans to deepen the hole to 29,000 feet to take a look at additional Lower Wilcox section. “There should be some more sands. Any other sands we see should be in the same trap geometry,” he says.

“If the development is successful and these sands have lateral extent, they will cover the structure. As we’ve learned from onshore and offshore drilling in the Miocene and Frio, all these biostratigraphic units have an east-west strike that parallels the coast,” says Moffett.

McMoRan has set a goal to get a production test within a year. “In order to get us down the road, we will be pinning our ears back to get equipment to get a flow test.”

Potentially, rates of 75- to 125 million cubic feet per day per well are in the ballpark. Tubing size and friction losses will be the limiting factors for wells at such depths.

“We need to get flow rates and see what kind of hydrocarbons we have,” he says. “There aren’t any comparisons we can use.”

New Orleans-based McMoRan operates Davy Jones and holds a 32.7% working interest. Partners are Plains Exploration & Production Co., Energy XXI, Nippon Oil, W.A. Moncrief Jr. and a private investor.

The discovery at Davy Jones has tremendous regional implications. McMoRan has a 3-D seismic database that ties the whole shelf area together. With the ultradeep Blackbeard well confirming subsurface velocities, and the spot-on hit at Davy Jones, the company is confident that its interpretation is correct.

The top of the Wilcox at Davy Jones is at 26,000 feet; at Blackbeard West, drilled to 32,997 feet in third-quarter 2008 in South Timbalier 168, top of Wilcox is estimated below 34,000 feet. The Davy Jones prospect was drilled just offshore the Holly Springs delta, one of the major sediment sources for the Eocene rocks. The Eocene depositional fairway is estimated to cover around 19,000 square miles on the shelf, spanning an area that measures nearly 100 miles north-south and 200 miles east-west.

“We have two wells—Blackbeard and Davy Jones—over a vast area,” says Moffett. “It’s quite a challenge to use two data points to make all these decisions and pick the right spots to spend our next dollars. But that’s what we will be emphasizing.”

The company has 150,000 gross acres below the salt weld in the ultradeep play, and two jack-up rigs capable of drilling to the target depths available. The Rowan Mississippi is currently on Davy Jones, and McMoRan has an option on the Rowan Ralph Coffman, a sister rig. With the development drilling it now has to do, it may bring on a third rig.

“We have a 200-square-mile area to cover, and 12 to 13 drill-ready prospects, with acreage and data to support a well,” says Moffett.

Wells are expected to cost in the neighborhood of $100 million each to drill. Another $50- to $75 million will be required for completion.

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