SPECIAL REPORT: Creating new geography: Seismic image processing illuminates new opportunity space in S. Louisiana

Sept. 24, 2007
Southern Louisiana is one of the most prolific petroleum provinces of the world.

Southern Louisiana is one of the most prolific petroleum provinces of the world. Proven plays have produced billions of barrels of oil and continue to provide sustainable opportunities for a broad cross section of the industry.

Even with all that has been produced, significant reserve adds for exploration and development companies are available in this region through a range of workflows from complex reservoir remediation projects in older fields to conventional new field wildcat exploration activity adjacent to and below existing production.

These efforts yield better results when the geoscience and engineering professionals can actually see what they are attempting to exploit. At Swift Energy, seismic and depth imaging of the regional geology of South Louisiana, as it has never been imaged before, has “created new geography” to develop and explore.

The Northern Gulf of Mexico basin margin, including the area of present-day South Louisiana, during the Late Cretaceous through Tertiary, can best be characterized as an unstable, rapidly subsiding, progradational, terrigenous clastic passive margin. The depositional environments and trapping configurations are heavily influenced by gravity and salt withdrawal tectonics.

Regional source rocks underlie the entire area, and complex burial history including broad areas of salt driven basin “downbuilding” create aggradational stacks of reservoirs from shallow depths to well beyond present depths of well penetrations. The predominantly vertical flux of migrating hydrocarbons provides pervasive charge to reservoirs in developed trapping geometries. These are all viewed much more clearly with imaging technology available today, and thus become “new geography.”

At Swift Energy, we believe the pursuit of “material” reserve growth does not require a move into deep water or politically unstable business environments outside the US. While creating new geography, we have armed our oil and gas professionals with state of the art data and a leading edge analytical toolkit. 3D-based seismic depth imaging technology coupled with sound petroleum systems science is leading the way toward realization of a robust, sustainable opportunity set.

Play-based approach

Successful exploration strategies are based on the premise that maximum value and leverage are created when a company is successful in a new basin or new play by accessing a dominant acreage position early in new play development.

Following recognition, access, and the initial testing of new play systems, early activity is the high-value growth phase (typically the first 5 years) during which the largest fields in the play trend tend to be found.

Once the largest reserve fields are discovered, value can still be added, but generally at a progressively lower rate, as the field reserves remaining to be proven diminish in size. This second phase of play maturation is currently taking place in the deepwater Gulf of Mexico. During this phase, companies can fall into a trap of overinvesting in proven plays and begin to destroy value. In other words, capital expenditures chasing reserves in these so-called “nonmaterial” areas begin to exceed the value of the reserves they are adding.

The budgets of most exploration companies reflect broad differentiation of stages in the exploration and development-led value creation cycle. The guiding principle is that new basin/new play activity is the true foundation of the oil and gas exploration business and must be preserved.

It is play fairway analysis that drives technical and business work. Play fairway analysis enables a company to understand the phases of exploration and development value creation so that resources are directed toward the right play fairways, with the right work program to maximize value.

Value locked up in competitor acreage can be unlocked by acquisition, a key element of Swift Energy’s strategy. Value can also be unlocked in company-held leases in perceived high-value play fairways by review and sometimes new data collection. Value locked up in drillable prospects can be unlocked by an aggressive drilling campaign.

The key is having a tool that allows the company to properly perceive value in its own properties and in the acreage positions of others. Swift Energy’s regional 3D database has enabled our technical teams to assess not just our own position, but many others as well.

The core of a successful exploration and production business, but also the challenge, is to build a link between the technical foundation provided by play fairway analysis with the currency of our business, that being acreage acquisition, drilling, and dispositions. Play fairway analysis is a critical technical tool in determining exploration and development business strategy.

The technical foundation provided by play fairway analysis is the identification of risk and the highgrading of areas for effective reservoir, petroleum charge, and regional seal. Play fairway analysis seeks to identify areas where these model elements provide for a highly material, commercially robust activity set.

New geography identified through 3D seismic-based depth imaging technology enables play fairway analysis to be performed at a higher level of confidence not possible in the past using older technologies.

Play fairway analysis and risk assessment

The objective of Swift Energy’s technical efforts is to explore efficiently by investing capital in new geography where our teams can better identify the most favorable, material expected outcome.

In pursuit of this goal, the exploration and development team’s ultimate challenge is to integrate diverse areas of technical knowledge into a working tool to be used by the business. The expected economic reward from exploration and development is determined by a combination of price, volume, and risk.

Although commodity prices are outside the control or influence of exploration and development companies, the volume and risk associated with the technical case can be assigned at a high degree of accuracy using new technologies and sound petroleum systems science.

Risk assessment

Volumetrics should be considered before finalizing the complete technical and commercial evaluation of any opportunity.

The absolute value of risk is determined based on a perceived volume within an opportunity. The probability of success represents the chance of successfully proving a volume of hydrocarbons that lies between determined minimum and maximum values.

The commonly expounded notion that finding moveable hydrocarbons or attaining flowing hydrocarbons to surface represents a “technical success” is logically flawed. Knowledge and confidence in the prediction of critical elements of risk play an important role in determining the range of outcomes, which then indirectly links knowledge, confidence, and risk.

The idea that complete technical risk is on a range of calculated volume outcomes and that it is only indirectly linked to knowledge are the two most common errors that enter into an exploration and development team’s strategic planning. Prospect and lead reviews that discuss chance of success at a purely “technical” level increase the probability of misplaced effort toward nonmaterial ventures.

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Many geological factors contribute to the risk of success on a given opportunity; thus all risking methods represent a compromise in that they aim to simplify the problem by identifying risk elements of common importance to all.

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One particular problem with some methodologies is the inability to convey differences between prospects in proven and conceptual plays. This is a significant shortcoming, because it is beneficial to strategic planning in new play development or emerging areas if play risk (the chance that a play will work) can be separated from prospect specific risk (the average success rate given the play works).

Focus

Depth dependent, drilling density-based maturity screening illustrates that much of the depths below 16,000 ft in South Louisiana remain underexplored.

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When chronology of the wells is factored in with drilling depth screening, it becomes very clear that an overwhelming percentage of the region has been drilled and exploited without the benefit of “modern” 3D depth imaged data. Most 3D data in South Louisiana has been acquired only since 1997.

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When that fact is considered in the screening process, it becomes clear that in excess of 95% of the drilling in South Louisiana was targeted without 3D data and, more specifically, without high quality depth imaging. Figs. 1-4 illustrate the key facts that in South Louisiana, there are under exploited areas on the scale of international concession blocks at depths well within the exploitable petroleum system.

Merging and processing: Pictures say a thousand words

Swift Energy’s strategic initiative has been and continues to be to assimilate, merge, and process proprietary and multivendor licensed 3D seismic datasets, creating a regionally uniform database of proprietary seismic data.

Where needed, Swift Energy creates proprietary 3D in key areas by either conducting a 3D shoot or merging disparate, multivendor data sets. Lake Washington field, for example, had no 3D data coverage over the core of the field until Swift Energy conducted a shoot in 2004.

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Leading edge application of depth imaging technologies has illuminated subtleties of the structural and stratigraphic architecture that often hold significant hydrocarbon accumulations. Fig. 5 illustrates the compositing of Swift Energy’s seismic datasets in southeastern Louisiana.

Figs. 6-12 capture “before and after” snapshots that dramatically illustrate the improvement in depth imaging that Swift Energy has attained.

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Technology and innovative application by skilled oil and gas professionals are the driving force in our industry. We believe it is key to focus on attacking reducible risks that have significant impact on the value creation process.

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This focus on the key element of risk is greatly enhanced by the creation of new geography, rendering accurate depictions of the subsurface. The care taken in our imaging workflows facilitates higher end analysis at wavelet scale.

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The result

Swift Energy’s teams delineate play-based, fairway-scale opportunity sets by imaging and mapping gross depositional environment and specific sediment fairways, along with detailed analysis of regional elements of the structural framework.

This pursuit of adding material hydrocarbon reserves is fundamentally tied to de-risking play fairway to prospect through comprehensive integration of borehole derived data and geophysics.

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Swift Energy’s commitment to technology-led strategic growth and recognition that the oil and gas industry is dependent on innovative application of petroleum systems science and engineering has empowered its oil and gas professionals to deliver value creation opportunities. Collectively, we believe the effort builds toward material, commercial success.

Acknowledgments

The authors acknowledge and express our thanks to WesternGeco and Seismic Exchange Inc. for the use of their data in this article. The seismic data used herein is owned or controlled by WesternGeco, Seismic Exchange Inc., and-or Swift Energy Operating LLC; interpretation is that of Swift Energy Operating LLC.

The authors

Ed Duncan is vice-president of exploration and development for Swift Energy Co. and has nearly 30 years of management and domestic and international exploration and development experience with Swift, BP, and a company he founded, Beta4. Duncan holds BSc, MA, and DBA degrees.

John Branca is director of exploration and development for Swift Energy Operating LLC and has nearly 30 years of management, exploration, and development experience with Swift Energy Operating LLC, BP, Tenneco, and Western Geophysical. Branca holds an MS and BS in geology from the University of Delaware.

Scott Scholz is the manger of geoscience technology for Swift Energy Operating LLC and has nearly 30 years of management and exploration experience with Spinnaker, TGS, Western, and Amoco. Scholz holds a BS in applied physics from Georgia Tech.