?Deepwater Gulf of Mexico leasing had a banner year in 2007 and so far in 2008, with the most recent sale, Central Gulf Sale 206, garnering a whopping $3.7 billion in high bids—the most since federal offshore leasing began in 1954. Bids were received from 85 companies.


But oil and gas production from deep water, defined by the Minerals Management Service (MMS) as depths greater than 305 meters (1,000 feet), is also making waves.


Deep water now provides 72% of the oil and 38% of the gas production from the Gulf, according to a report released at this year’s Offshore Technology Conference by Lars Herbst, MMS regional director.
Deepwater production is coming into its own. MMS data show that, for the first time in history, all 20 of the highest-producing blocks offshore are in deep water.


Proved, announced deepwater fields now total 125, an impressive 44% increase from year-end 2006. Some 15 deepwater fields began producing in 2007.


These include BHP Billiton’s Shenzi Field (formerly known as Genghis Khan and acquired from Anadarko Petroleum); Atlantis, discovered by BP in 1998; and several fields tied into the huge Independence Hub, which supports 10 fields. At the end of 2007, there were 130 producing projects in deep water.


The Atlantis semisubmersible platform is the deepest moored, floating oil and gas production facility in the world.


Encouraged by these statistics, operators continue to venture farther from shore in ever-deeper water. Last year, some 15 rigs were drilling in water greater than 5,000 feet, a record number.


Overall in deep water, operators drilled 94 exploration and 48 development wells in deep water. Eight deepwater discoveries were announced and three of these were in water greater than 5,000 feet, which MMS defines as ultra-deepwater.


The three deepest-water discoveries made in 2007 were Shell’s Vicksburg find in 7,457 feet of water in DeSoto Canyon, ExxonMobil’s Julia (Lower Tertiary) find in 7,087 feet of water in Walker Ridge, and BP’s Isabela find in 6,535 feet in Mississippi Canyon.


Non-majors announced the remaining five discoveries. In fact, non-majors now hold two thirds of all deepwater leases. “Remarkably, in 2007, 46% of the total number of development wells drilled were in water greater than 7,500 feet,” the MMS reports.


There are approximately 7,443 active leases in the Gulf and 54% involve deepwater blocks.


From 1992 through year-end 2006, deepwater oil production rose 820% and gas production rose 1,155%, the MMS adds.


Since the last deepwater report in 2007 (which covered data through 2006), total Gulf oil and gas discovery volumes have gone up 15% thanks to the Lower Tertiary trend, which contains an estimated 2.8 billion barrels of producible hydrocarbons.


However, the MMS reports that it does not yet have complete estimates of proved and unproved reserves for the announced 2006 and 2007 deepwater discoveries.


More activity is to come as companies announce plans for more deepwater drilling rigs. Some 13 rigs are under construction and will be ready for use in the next two or three years. Most are already under long-term contract with E&P firms. These rigs will be capable of drilling in water as much as 12,000 feet deep. (For more on deepwater Gulf exploration trends, see “Deepwater Reserves” in this issue.

The MMS' "Deepwater Gulf of Mexico 2008: America's Offshore Energy Future" report(PDF).

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