A. D. Koen
Gulf Coast News Editor
Gulf of Mexico operators are drilling two subsalt wildcats with big implications for the region's petroleum prospectivity.
If successful, the Mahogany prospect on Ship Shoal Block 349 and the Mattaponi prospect on South Marsh Island Block 169 by yearend could spawn a major subsalt exploration play in the gulf.
Mahogany operator Phillips Petroleum Co. and Mattaponi operator Amoco Production Co. say upside potentials of the two subsalt tests are among the best exploratory targets in the world. And by some estimates, large horizontal, allochthonous salt sheets could be concealing oil and gas bearing strata under as much as 60% of the gulf in less than 5,000 ft of water.
Several companies have staked out substantial subsalt acreage positions, and other subsalt wildcats are to spud this year.
No one to date has disclosed a commercial subsalt discovery. But operators' interest in gulf subsalt potential has continued growing as evolving 3D seismic data acquisition and processing techniques have given progressively better glimpses of geology beneath the salt sills.
Mahogany and Mattaponi could affirm the accuracy of 3D seismic technology for imaging structures at depth beneath the salt sheets. Some operators believe the gulf's subsalt potential is so great that positive results of those and other subsalt tests could give a big boost to U.S. oil and gas reserves.
Moreover, better understanding of when and how the allochthonous salt bodies migrated to their present positions could prompt earth scientists to rethink theories about the gulf's tectonic evolution.
TIMING OF MIGRATION
Geoscientists generally agree that horizontal salt sheets in the gulf, as well as hydrocarbons discovered in many productive reservoirs, migrated through subsurface faults to their present positions from deeper strata.
The timing of gulf salt and hydrocarbon migrations is one of the key factors determining whether hydrocarbons exist subsalt. But it is one of the most difficult technical questions to resolve, and the answers vary in different parts of the gulf.
"If hydrocarbons moved up before the sale was horizontally injected, the chance lessens for reservoirs underneath," said Rob Brooks, vice-president of interpretative products at TGS-Calibre Geophysical Co., Houston. "If the salt was horizontally injected and then hydrocarbons migrated, that's a completely different situation."
John Adamick, TGS-Calibre offshore marketing manager, said how specific salt sheets were injected could affect the quality of subsalt sands, but in most cases subsalt sediments should be just as good as sands alongside the salt.
"I'm using the philosophy that salt is just obscuring units beneath it and that the sediments beneath the salt are very similar to comparable areas where there is no salt," Adamick said. "In general, I don't see any reasons why conditions of sands in subsalt formations should be any different from areas immediately around the salt."
CURRENT SUBSALT DRILLING
Is the risk greater of finding hydrocarbons in sands below salt sheets than in comparable formations away from the salt?
"The only way to determine that is to drill enough wells," Brooks said.
A handful of companies is doing just that.
Phillips spudded its Mahogany wildcat in mid-May in about 370 ft of water on Ship Shoal 349. Diamond M-Odeco's Endeavor semisubmersible is drilling the well.
Phillips and partners expect the well to pass through a salt sill more than 3,000 ft thick. Endeavor is expected to reach target depth of 16,500 ft in August. Mahogany's objective is a subsalt faulted anticline.
Before spudding the well, the company acquired 3D seismic data, then undertook time consuming reprocessing and interpretation phases, said Mike Coffelt, Phillips North American exploration manager.
"It was quite a long process to come up with a prospect we were willing to drill because these are relatively expensive wells," Coffelt said.
Phillips acquired Block 349 in May 1990 at a Minerals Management Service lease sale. The company at first held a 100% interest in the lease but later included Amoco and Anadarko Petroleum Corp. as partners to spread risks.
Mattaponi, the gulf's other current subsalt test, is the first Amoco operated subsalt wildcat on a location indicated by 3D seismic data. Spudded at the end of June on South Marsh Island 169, Mattaponi is expected to reach total depth in October.
Amoco considers subsalt resource potential high in the gulf and ranks subsalt prospects as a major focus of its U.S. exploration. Still, the company said technical risks associated with individual prospects in the play are high. Like Phillips on Mahogany, Amoco took partners on Mattaponi-Oryx Energy Co., Dallas, Amerada Hess Corp., and Petroleo Brasileiro SA-to spread the risk.
Amoco drilled three earlier subsalt wildcats of note in the gulf, all based on enhanced 2D seismic data. Two were in areas in Louisiana's coastal transition zone-Lake Washington in 1990 and Bay Marchand in 1991-and the other was on Vermilion Block 356. While included on lists of the gulf's most significant subsalt wells, none of Amoco's tests found commercial oil or gas.
POSSIBLE SUBSALT TESTS
Despite the lack of a commercial subsalt strike, several other subsalt test are planned in the gulf this year.
Mahogany operator Phillips intends to spud its second operated subsalt test, again with Anadarko as a partner, on South Timbalier Block 260.
Ken Nadolny, Anadarko's manager of offshore exploration, said his company also will be operator on a third subsalt well expected to get under way by yearend. But timing and location are yet to be decided.
"We're working on a number of prospects, trying to develop them and drill the best ones first," Nadolny said. "We still have quite a bit of geological and geophysical work to do, so I'd hate to speculate about where our third well is going to be."
ln addition to its nonoperating interest in Mattaponi, Oryx is studying subsalt prospects under two other tracts in the gulf, industry sources said. Oryx has not disclosed the timing of the tests, but those and several other subsalt prospects likely will be drilled within the next 2 years.
Phillips counts 8-10 subsalt prospects on about 60,000 net acres in the gulf on which leases are to expire by spring 1995.
Coffelt said all of Phillips' subsalt tracts are near infrastructure on the lower shelf in 200-400 ft of water. Possible subsalt reservoirs targeted for testing are relatively deep, with well depths of 16,000-18,000 ft.
Counting prospects under flanks of salt domes or diapirs, Anadarko has about eight subsalt prospects on about 15 blocks in the gulf, all but two in relatively shallow water. Nadolny said Anadarko expects to evaluate prospects on all of its subsalt acreage before the leases begin expiring in 1995.
Oryx, too, has built a fairly substantial acreage position in the past 2-3 years, including prospects under all types of allochthonous salt sheets.
Jill Meese, Oryx manager of exploration in the eastern Gulf of Mexico, said some of the prospects could go on production quickly because they are near infrastructure. Others with higher reserves potential in deeper water could not be brought to production for several years, she said.
LACK OF FOCUS
Gulf operators in the past decade have drilled several wells that penetrated salt bodies quite unlike the salt domes known for several decades earlier.
Technological limitations in most cases prevented operators from seeing what happened to the trends after they disappeared under salt sheets. Operators didn't understand relationships between salt lenses and subsalt hydrocarbons well enough to predict the presence of subsalt structure or hydrocarbons.
Brooks and Adamick said one reason companies had trouble focusing subsalt activity was because allochthonous salt bodies occur at different depths and depositional settings across the gulf. Moreover, salt sheets in the gulf occur as irregular bodies, depending on the timing of salt migration and tectonic forces.
To help focus an internal study of salt sheets and subsalt exploration, TGS-Calibre grouped allochthonous salt sheets imaged by high resolution seismic data into eight structural styles and plotted structural style distributions across the gulf's shelf and slope off Louisiana and Texas.
- Area 1 encompasses roughly the northern and westernmost tier of federal planning areas nearest to shore.
- Area 2 covers roughly the second tier of planning areas, including 10-15 miles beyond the southern edge of the shelf.
- Area 3 includes most of East Breaks, Garden Banks, and Green Canyon planning areas and northern parts of Alaminos Canyon, Keathley Canyon, and Walker Ridge areas.
- Area 4 is comprised of a narrow belt in deep water north and parallel to the Sigsbee scarp.
Boundaries between the salt distribution areas defined by TGS-Calibre vary considerably, as do distinctions separating the salt's eight general structural styles.
Debate continues over concepts of the timing of salt deposition and differential loading that influenced salt deformation. But as more data have become known, some trends are beginning to emerge.
THE GREATER PLAY
Similar to the realization that salt occurs in various structural styles is the conclusion that subsalt hydrocarbons likely are trapped by many mechanisms in a variety of settings.
Adamick said when gulf operators began thinking about traps beneath horizontal salt, many envisioned reservoir rock trapped against a salt face with salt as the seal.
"That's one likely play," Adamick said. "But there is a much greater play, and that is any structure that exists beneath the salt-not necessarily associated with the salt but where the salt is obscuring the structural trap beneath it."
Another trend that is becoming apparent, at least in some locations, is that Gulf of Mexico formations under horizontal salt sheets can be extremely overpressured. That phenomenon was examined through a numerical model and a review of results from four noncommercial subsalt wells-2 West Cameron Block 505, 1 Garden Banks Block 171, 1 Vermilion Block 356, and 1 South Marsh Island Block 200-by 1993 Offshore Technology Conference paper OTC 7087 presented last May in Houston.
The authors concluded that overpressure in some subsalt formations occurs because salt sheets provide an impenetrable barrier to fluids flowing toward the surface. The degree of overpressure can vary, depending on salt horizontal length and vertical thickness, depth and rate of salt burial, and presence of reservoir rocks.
In any case, the authors said, the degree of subsalt overpressure can affect prospect economics as well as drilling decisions and should be included in prospect evaluations.
3D PROCESSING
More than recent advances in seismic data collection, TGS-Calibre's Brooks attributes improving understanding of the gulf's salt and subsalt geology to advances in 3D seismic data processing.
Processing techniques such as prestack and poststack depth migration, velocity modeling, and turning wave migration have improved geophysicists' ability to seismically image at depth subsalt geologic structure. Equally important, more powerful, efficient computers have lowered the costs of crunching the large volumes of 3D data required by some of the more exotic 3D processing techniques, Brooks said.
The new processing techniques make it possible to boost weaker 3D raypaths, eliminate data distortions, and generate depth data from time sections. The new data can image subsalt structure, including anticlines, faulted blocks, and other trapping mechanisms not reliably mapped until the past couple of years. In some cases, companies are able to identify reservoir rocks associated with subsalt traps.
Still, Adamick said, even with more advanced processing techniques, companies are limited to looking for structural traps at depth. "That's all the data will allow," he said.
Despite continuing technological limitations, all operating companies involved in the gulf's subsalt play agree that 3D seismic data are essential to finding and defining subsalt prospects.
Staff geologist Bill House said Amoco has been developing technologies for about the past 9 years on which its subsalt exploration program is based. House has been the senior Amoco geologist working on the subsalt program for the past 3 years.
"A number of technologies have driven this whole play," House said. "But key advances have come in seismic processing technologies, like 3D poststack and 3D prestack depth migration. That's something that has come of age in the past couple of years."
Without advanced 3D seismic data processing capabilities, House said, companies still would have a very difficult time sustaining a play with prospects linked by structural tectonics theory, such as salt migration in the gulf.
"With it, it's still technically a high risk play," he said. "But it's something that's pursuable."
ECONOMIC CHALLENGES
In addition to technical challenges, some companies are discouraged from pursuing subsalt prospects in the gulf by subsalt economics.
Although subsalt prospects are being defined gulf-wide in many situations, upfront costs are consistently hefty.
Brooks said a subsalt prospect must justify the cost of acquiring and processing 3D seismic data.
Adamick said, "To do some of the more elaborate processing techniques, the cost is wide open. A company probably could spend a couple of million dollars before it spudded a well."
Add to that $8-10 million for drilling a 16,000-18,000 ft wildcat with a semisubmersible drilling rig, and the play rightly becomes the province of major companies and large independents.
Because of the high upfront ante, subsalt prospect sizes have to be fairly significant, Phillips' Coffelt said.
Beyond upfront exploratory costs, economics vary considerably.
Coffelt said development economics of Phillips' subsalt prospects are "all over the map." Some of the company's prospects are oil prone, some gas. They occur at different depths. And because of structural variability if a discovery is made, development program complexity will vary considerably.
"It's hard to say we need 'X' number of barrels of oil equivalent (BOE) to make the play economical, because for one prospect it might be true while for another it would be completely off base," Coffelt said.
MISSISSIPPI CANYON 211
While several subsalt tests appear likely within the next 2 years, officials of several companies involved in the play said a commercial subsalt strike would spawn a dozen subsalt wildcats or more within a year of the discovery.
Many operators cite a well drilled in 1990 by Exxon Corp. and Conoco Inc. in 4,350 ft of water on Mississippi Canyon Block 211 as the nearest discovery yet to a commercial subsalt well in the gulf.
Exxon and Conoco in May 1990 reported the Block 211 wildcat found five oil and gas sands between 10,000-13,000 ft and estimated reserves at 100-200 million BOE. To reach the sands, the companies penetrated a salt sheet at 5,749-8,764 ft.
Dave McBride, Gulf of Mexico exploration manager for Exxon Exploration Co., said Exxon decided to drill the Mississippi Canyon 211 wildcat because the underlying salt sheet is relatively simple and the company had good data on the prospect.
"Also, data in the area indicated amplitudes below the salt," McBride said. "That helped take our confidence to a new level."
McBride agreed that project economics in more than 4,000 ft of water would be a greater barrier to commerciality than a discovery on the gulf's shelf or slope.
"But I would not characterize project costs as substantially higher than a nonsubsalt prospect in the same water depth," he said,
Carlos Dengo, supervisor of Exxon Exploration's subsalt project, said it is easier to image subsalt prospects in deep water because salt sheets tend to be less deformed there than they are on the shelf. Salt on the shelf was injected earlier than on the slope, has undergone more deformation, and as a result generally is more complex.
"When there is more complexity on salt surfaces, it dramatically increases imaging problems," Dengo said.
And the uncertainty.
Anadarko's Nadolny said the possible commerciality of Exxon's Mississippi Canyon 211 discovery wasn't the most important issue for many companies. "The fact that someone found pay under the salt was the key factor to us," Nadolny said. "The Exxon well was a good well because it showed that operators can drill through salt and find pay underneath."
DISCOVERY ON SHELF
Nadolny believes subsalt drilling would be increasing in the gulf even without Exxon's Mississippi Canyon 211 well because of the degree to which seismic data have improved.
Base salt reflectors not visible on older data can be mapped today over wide areas, "people have better ideas of where the salt is-top of the salt, base of the salt-and it's becoming obvious there are sections beneath the salt," Nadolny said.
But while many companies reportedly want to get into the play, they are reluctant to drill the subsalt because-even with available 3D seismic data-they are unable to image subsalt sections with the precision possible on other prospects in the gulf.
A subsalt play in water less than 600 ft deep would be within the economic capabilities of more companies than a play in deep water. In addition, subsalt production on the shelf could be brought on line much more quickly than from deepwater projects.
By some estimates, companies participating in a subsalt play in 300-600 ft of water could expect to start generating cash flow in less than 5 years.
"What I like about our Ship Shoal 349 prospect is we are in reasonably shallow water, we are near infrastructure, and we're drilling to something that's been relatively untapped," Phillips' Coffelt said. "So it's like moving back in time on the shelf probably 15-20 years and going after some prospects that haven't been tested."
Brooks maintained an economic subsalt discovery on the shelf "would kick off a subsalt play for the next 5-10 years.
ADDITION TO RESERVES
If a commercial discovery is made on the shelf or in deep water many explorationists believe structures hidden beneath the gulf's salt sills are so large and potential drillsites so numerous major additions are possible to U.S. oil and gas reserves.
Many Plio-Pleistocene wells in the gulf were drilled to about 7,000 ft before reaching salt. Given a horizontal salt sheet 2,000-3,000 ft thick, as much as 8,000 ft of subsalt strata could hold commercial oil and gas reserves.
Nadolny said, "Anadarko is looking at prospects all over the world, and the subsalt play is the kind of play where I can compete favorably in terms of potential reserves and sizes of the prospects.
"It's exciting because we can make this play close to home in one of the world's most prolific oil and gas producing basins with existing infrastructure, at relatively modest cost, and with very high upside potential."
While the technical and economic risks of the gulf's subsalt prospects are high, Anadarko has equivalent risks on most of its foreign deals, "so the risk doesn't worry us," he said.
Proponents of oil and gas development on the Arctic National Wildlife Refuge on Alaska's North Slope estimate resources there in billions of barrels. But four or five 200 million bbl subsalt discoveries in the gulf would reach the billion barrel mark and in an infrastructure-positive environment. "We could get this stuff on line in 2-5 years," an industry source said.
So the subsalt play could yield a significant addition to U.S. oil and gas reserves by the end of the 20th century.
Brooks said the odds of an economic subsalt discovery appear better today than ever because of the growing likelihood of oil or gas bearing subsalt sands.
"There's a lot of horizontal salt out there, and there has to be significant hydrocarbons trapped under some of those bodies," he said.
At the current early stage of exploration, Brooks said total subsalt reserve potential in the gulf could be anywhere from minimal to Saudi Arabian in size.
"There is no way to tell without more information," he said.
Copyright 1993 Oil & Gas Journal. All Rights Reserved.
