More than 100 miles off the Gulf Coast, in thousands of feet of water, under salt sheets that can be thousands of feet thick, lie untapped reservoirs that some believe could rival the premier oil provinces of the world. The play-known by many as the Mississippi Fan Foldbelt, by others as the Atwater Foldbelt-snakes across the deepwater Gulf of Mexico from the Green Canyon and Atwater Valley regions into the ultradeep areas of Walker Ridge and Keathley Canyon. The northern stretches of the foldbelt have yielded an impressive string of discoveries in the 6,000-foot water-depth range, and operators are quite anxious to see what the play has to offer in 8,000, 9,000 and even 10,000 feet of water. A couple of newbuild drillships have been deployed in recent months to regions of the foldbelt, including Global Marine's Glomar C.R. Luigs, drilling for BHP Petroleum, and Transocean Sedco Forex's Discoverer Spirit, which begins drilling for Unocal's Spirit Energy 76 sometime in the third quarter. It won't be too long before these companies and others know if their hunches about this area are on the money. Indications so far seem to be positive. "I really like the area," says Roger Sassen, deputy director of resource geosciences for the Geochemical and Environmental Research Group at Texas A&M University. "I think there's an awful lot of oil there." "If these structures were on shore, they would have been drilled many decades ago," says Paul Weimer, professor of geological sciences at the University of Colorado. "This is like taking the Appalachians or the Rocky Mountains and sticking them in deep water. That's how big these structures are." The foldbelt formed during the mid-Miocene period, roughly 15- to 20 million years ago. After the belt was created, salt extruded over some 80% of the trend, masking the huge structures from view. Seeps in the area indicate that the source rocks are probably late Jurassic, formed some 154 million years ago. Because the reservoirs were deposited before the folds were created, they have good lateral continuity, Weimer says. That's important because if this play is to be economic, high-rate, high-ultimate-recovery wells are a necessity, meaning good lateral continuity and connectivity in the reservoir sands are a must, he adds. Thus far, most of the discoveries have been clustered in southern Green Canyon and western Atwater Valley. The eastern part of the trend, in the eastern Atwater Valley region, has not yet yielded any major finds. "Evidence suggests the folds in the west are a few million years older," Weimer says. "There's still some argument whether the foldbelt in the east is mature or not." Sassen believes there is great potential for success in the eastern structures. He's performed studies around Atwater Valley Block 425 that look promising for the region-and especially for leaseowner BHP. "I really like that prospect. There's a seep right on top of it, one of the biggest oil seeps in the Atwater Valley," he says. Though some parts of the foldbelt are said to yield rather low-quality oil, this seep looks quite good. "There's no doubt that they've got charge there, and from the biomarkers, it looks to me like they're going to have good-quality oil." The first well in the foldbelt, drilled by Shell in 1987, was a dry hole in Atwater Valley Block 471. "It wasn't a lack of charge. I think it was a lack of trap or seal," Sassen says. Several years went by before the industry was ready to drill again in waters that deep. The next attempt was on the west side of the belt in 1995. That was when BP drilled Atwater Valley Block 575. The well, called Neptune, was a success, and the company currently is studying development plans for the field. The foldbelt began making major headlines in 1999 when companies started announcing a slew of discoveries. In Green Canyon, BP found Atlantis in Block 699, Mad Dog in Block 826 and Timon in Block 563. Conoco found K2 in Block 562. These discoveries-in 4,000 to more than 6,000 feet of water-have led operators to wonder whether similar successes can be found in water 7,000 feet deep and greater. "The thing that has us so excited about this part of the world is Mad Dog," says Mike Bell, vice president for Unocal's Deepwater Gulf of Mexico program. "That was the breakthrough to help us understand these petroleum systems." Unocal, a partner in Mad Dog, K2 and Timon, was to launch its ultradeep drilling campaign in the Gulf of Mexico in August with Transocean Sedco Forex's newbuild Discoverer Spirit drillship. Unocal's drilling targets lie along a trend that follows the Mississippi Fan Foldbelt and extends even farther west into Keathley Canyon. Company executives believe several of their prospects share the same petroleum system as Mad Dog. The first well in the program will be Dana Point on Walker Ridge Block 678 in 7,308 feet of water. This prospect is a significant step-out from Mad Dog, but executives believe it is fed by the same system. The Dana Point target is some 21,000 feet below the seabed, and drillers will have to tackle an 8,000-foot-thick sheet of salt on the way down. Estimated drilling time is just 61 days. Other prospects to be tested with the Discoverer Spirit include Dendara, Green Canyon blocks 785 and 786 in 7,145 feet of water; Gorgona, Keathley Canyon Block 643 in 6,500 feet of water; and Trident in Alaminos Canyon Block 947 in 9,800 feet of water. Executives hope this foldbelt campaign will be a new beginning for Unocal's deepwater program. Last year, the company ran a very efficient deepwater drilling campaign with the Transocean Richardson semisubmersible, beating the industry's average drilling time for deepwater wells by about 50% during the five-well run, executives say. The final results, however, weren't much cause for celebration as the company hit a string of dry holes. Today, Unocal is out to prove that it's not only capable of drilling quickly, but that it can find oil as well. If the company can do both, executives say, it will have more opportunities to participate in-and operate-future deepwater wells. "We need and want early success in the ultradeep," Bell says. BHP Petroleum is another company focusing its sights on the deeper regions of the foldbelt. The Australian-based company got a taste of what the belt has to offer when it partnered in the Neptune, Mad Dog and Atlantis discoveries. Today, the company aspires to find success as an operator with plans to explore three prospects that are on trend with previous foldbelt finds. Those three prospects-Chinook, Cascade and Klondike-cover 21 Walker Ridge blocks in water surpassing 9,000 feet. They were purchased 100% by BHP in 1996 and 1997, before the Green Canyon drilling successes upped the value of the real estate. BHP paid an average of $490,000 per block for Chinook, Cascade and Klondike. Today, competitive acreage within the foldbelt trend can go for almost $10 million per block. Earlier this year, BHP lessened its financial risk by farming out interests in these prospects to Total Exploration Production USA in return for help with exploration costs, which can be massive in ultradeep territory. Under the terms of the deal, Total will earn a 30% stake in Chinook and Klondike, and the company has the option to earn a 30% stake in Cascade. BHP will retain operatorship in all the prospects and a 70% working interest. The first prospect to be drilled is Chinook, which lies outside of the salt canopy that covers much of the foldbelt. The Glomar C.R. Luigs-which recently drilled its debut well, a successful appraisal of the Atlantis discovery-will drill the wildcat. Both Unocal and BHP are attacking their foldbelt prospects with fairly powerful weapons. The Discoverer Spirit and the Glomar C.R. Luigs exemplify some of the most innovative ultradeep drilling concepts on the market today. The Discoverer Spirit boasts a proprietary dual-activity drilling system, in which the vessel has two drilling stations housed in a single derrick. The drillers, who sit in the same type of seats found in Porsche automobiles, can perform many tasks simultaneously, rather than in the sequential steps taken by conventional rigs. This capability can shave weeks off an operator's drilling schedule. The Discoverer Enterprise, on contract for BP, was the first rig of this class, and another, the Discoverer Deep Seas, is being built to work for Chevron. Unocal is paying a day rate of $210,000 on a five-year contract for the Discoverer Spirit, and it expects to cut its drilling time by 25% with the dual-activity system. The Glomar C.R. Luigs has an enhanced pipe-handling system that provides a safer and more efficient operating arrangement on the rig floor, Global Marine executives say. The system, which combines one vertical pipe racker and one horizontal pipe racker, creates a high level of redundancy in case of a mechanical breakdown. In addition, the rig's thrusters can fully retract into the hull, which allows maintenance and repairs to be done at sea, saving the time and money it would take to work on the thrusters in dry dock. BHP has a 30-month contract for the Glomar C.R. Luigs, and TotalFinaElf has two six-month drilling slots. The day rate is $208,000. With a construction cost of $365 million, Global Marine will recoup 60% of its costs from the BHP contract. A sister ship, the Jack Ryan, is to be delivered in the third quarter to Exxon Mobil. Rigs such as these have made it possible to drill quickly and economically in ultradeep waters. In fact, executives say the biggest obstacle to finding oil in the Mississippi Fan Foldbelt has nothing to do with the drillbit. The main challenge is locating the productive reservoirs with seismic data. The salt that covers much of the foldbelt wreaks havoc with seismic imaging. Salt's low density, high velocity and structural complexity make it extremely difficult to obtain an accurate structural interpretation of the reservoirs that lie underneath it. "Salt makes a mess out of seismic," Bell says. "I looked at Walker Ridge in the late 1980s, and much of it was unintelligible." But during the past few years, a technology called 3-D prestack depth migration has become widely available, bringing the blurry seismic lines of the past into sharper focus. In ultradeep areas such as Walker Ridge, the salt is cold, rigid, and generally less deformed than the salt found in the shelf and flex trends of the Gulf, meaning the results of 3-D prestack depth migration are especially clear. Of course, finding the oil is just part of the story. The industry must also figure out how to produce hydrocarbons at these water depths, an endeavor that will stretch the limits of today's technology. To develop fields in up to 10,000 feet of water, improvements must be made in subsea systems and controls, pipeline installations, mooring systems, risers and flow assurance, and other areas. Subsea equipment will need to be modified to withstand the intense pressure that comes with a 10,000-foot water column, and the Gulf's infamous Loop Current will test the limits of risers' fatigue resistance. Frigid temperatures in the ultradeep inhibit the passage of hydrocarbons through flowlines. Globally, the leader in deepwater production is Petrobras, which is producing in approximately 6,000 feet of water offshore Brazil. In the Gulf of Mexico, the DeepStar consortium is studying what barriers must be overcome to produce oil and gas at 10,000-foot water depths. DeepStar is examining a variety of systems-including subsea tiebacks, tension-leg platforms, spars, and floating production, storage and offloading vessels (FPSOs)-and its goal is to pinpoint which technologies merit additional investment. "Only after we have systematically identified the gaps on all the systems will we as a group try to evaluate where we should spend the money to bridge the gap so we have some system that will work out in 10,000 feet," says Paul Hays, DeepStar project manager. So far, DeepStar has completed its assessment of subsea tieback systems and is now looking at floating production options. The initial development infrastructure along the Mississippi Fan Foldbelt likely will be laid by BP. The company is shelling out millions upon millions to figure out how to develop its portfolio of foldbelt discoveries. Earlier this year, Mustang Engineering of Houston won a $12-million front-end design contract for BP's Crazy Horse and Holstein discoveries, including management of any resulting topsides design work. Mustang also will provide management support for topsides fabrication, floating systems design and fabrication, facilities installation, pipeline design and installation, and subsea systems design, fabrication and installation. (At press time, Mustang had entered into final negotiations to be purchased by Aberdeen-based John Wood Group Plc.) Crazy Horse, in Mississippi Canyon, is estimated to be the biggest Gulf of Mexico discovery to date, containing an estimated 1 billion barrels of oil equivalent. Holstein, the shallowest of BP's southern Green Canyon discoveries in about 4,000 feet of water, has been rumored as a possible production hub for other finds in the area. Though the initial contract announcement listed only these two discoveries, work on Atlantis, Mad Dog and Neptune is expected to follow. Paragon Engineering Services and Intec Engineering, both based in Houston, have been tapped by BP to help design the new oil and gas transportation infrastructure that will be needed to bring these undeveloped discoveries on production. Paragon will focus on the onshore and continental shelf offshore pipelines and potential booster stations, as well as provide overall project administrative support. Intec will concentrate on the deepwater infrastructure. The contracts are worth approximately $8 million during the first year. Currently, there are no pipelines near BP's foldbelt discoveries, but the supermajor expects to have some sort of system in place by the time the first of these fields is ready for production, as early as 2003. "We estimate the cost of providing the needed infrastructure to be in excess of $1 billion," said David H. Welch, president of BP's Gulf of Mexico Deepwater Development group, when announcing the pipeline contract. "We are initiating this effort on a 100% BP-funded basis to allow us to direct the pace of this work, giving us greater assurance that the transportation option [or options] selected will be available when our new discoveries begin producing." It's a nice position for an operator to be in, needing a way to transport hundreds of millions of barrels of oil from the deepwater to the shore. If all goes well in the Mississippi Fan Foldbelt, there soon will be many more companies in that same situation.
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