Last year, explorers hit it big in the deepwater Gulf of Mexico. Early estimates are that some 1.5 billion barrels of reserves were added from 15 discoveries, reports U.K.-based consulting firm Wood Mackenzie. That's a strong jump from 2004 and 2005 results, when annual reserve adds fell short of 1 billion barrels.

Two monster finds accounted for half of the new reserves: BP's Kaskida, in Keathley Canyon 292, and Hess Corp.'s Pony, in Green Canyon 468. The first find contains estimated proven and probable recoverable oil in the range of 430 million barrels; the latter holds about 350 million. Altogether, the industry enjoyed a success rate of more than 40% from deepwater exploration wells reported on last year.

"The successes of 2006 show that big finds are still to be made in the Gulf of Mexico and it remains one of the top deepwater hunting grounds in the world," says Zoë Sutherland, Gulf of Mexico analyst. But those hunting grounds are more remote and difficult to access than in previous years. Notably, an average deepwater exploration test took more than 100 days to drill in 2006, and more than half the wildcats targeted Lower Tertiary and deep Miocene sediments.

Kaskida appears to be one of the deepwater Gulf's megafields. BP encountered 800 feet of Lower Tertiary hydrocarbon pay in the 32,500-foot test, which was the first discovery in Keathley Canyon. The test, drilled in nearly 6,000 feet of water, successfully bridged the two established areas of Lower Tertiary potential, from Alaminos Canyon to the west and Walker Ridge to the east.

The deep Miocene play also scored a whopping success in the Pony discovery. Hess drilled its well on the block next to Nexen's Knotty Head; the find is believed to be part of the same structure. The 32,400-foot Pony wildcat, drilled in 3,500 feet of water, encountered 475 feet of oil-saturated Miocene sandstones.

According to WoodMac, a total of 34 companies participated in exploration wells in the deep waters of the Gulf in 2006. Shell and BP each drilled six tests; Anadarko Petroleum and Kerr-McGee Corp., now combined, drilled five apiece. Other active wildcatters included Chevron, Devon Energy, Noble Energy, Plains E&P, Dominion E&P, Total SA, Hydro and Petrobras.

Deepwater Gulf exploration is not only in increasingly greater water depths but also deeper below the seabed, WoodMac notes. "While the number of exploration wells drilled in 2006 remained low, improving only marginally on 2005, the number of days that rigs spent drilling in the Gulf increased by almost 30%," the firm reports.

"This illustrates a growing trend towards drilling deeper and more complex wells resulting in an average drill time for a well in the deep water of over 100 days."

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