PHILLIPS, PARTNERS TO DEVELOP FIRST SUBSALT DISCOVERY IN GULF

April 24, 1995
Phillips Petroleum Co. and partners have declared commerciality of the Gulf of Mexico's first subsalt discovery and unveiled a program for its development. Under a timetable disclosed last week, production from Mahogany field could begin by yearend 1996. Site is in about 370 ft of water on Ship Shoal South Addition Blocks 349 and 359 (see map, OGJ, June 20, 1994, p. 30).

Phillips Petroleum Co. and partners have declared commerciality of the Gulf of Mexico's first subsalt discovery and unveiled a program for its development.

Under a timetable disclosed last week, production from Mahogany field could begin by yearend 1996. Site is in about 370 ft of water on Ship Shoal South Addition Blocks 349 and 359 (see map, OGJ, June 20, 1994, p. 30).

Plans call for fabrication to begin next month of a steel jacketed platform capable of producing as much as 45,000 b/d of oil and 100 MMcfd of gas. Installation of the structure at a site over Mahogany's six slot drilling template in about 375 ft of water on Block 349 is to begin by third quarter 1996, with production staring at about 22,000 b/d of oil and 30 MMcfd of gas.

Now drilling 3 Mahogany appraisal well to a bottomhole location on Ship Shoal 359, operator Phillips, Anadarko Petroleum Corp., and Amoco Production Co. announced the Mahogany find in fall 1993, touching off a flurry of subsalt wildcats across the gulf's Outer Continental Shelf (OGJ, Oct. 4, 1993, Newsletter).

In an early October 1993 test, 1 Mahogany flowed more than 7,250 b/d of oil and 9.9 MMcfd of gas through a in. choke with 7,083 psi flowing tubing pressure.

Partners would not confirm commerciality of the strike at that time, but the discovery well's location, in shallow water and within relatively easy reach of Gulf of Mexico oil and gas pipeline networks, appeared to ease the economic burden typical of most offshore exploration plays. Industry estimates of Mahogany reserves are 100-300 million bbl of oil equivalent.

Phillips and Anadarko each hold a 37.5% interest in Mahogany and Amoco 25%.

SUBSALT ENTHUSIASM

Plans to develop Mahogany field were disclosed at a time when the gulf's subsalt drilling activity appeared to have waned.

In a February 1995 report, Petrie Parkman & Co., Denver, said despite the promise of Mahogany, the region's subsalt activity still was in its early exploration phase, with much to be learned about the extent of subsalt resources as well as the technological capabilities being used to pursue them.

Petrie Parkman counted only three active subsalt wells in the gulf, but five dry subsalt wells since Mahogany's discovery, including several that had logged mechanical delays that led to high costs. From among nine subsalt wells spudded since 1 Mahogany, the company listed these wells as plugged and abandoned:

  • 1 Mattiponi wildcat on South Marsh Island Block 169 at 18,020 ft total depth by operator Amoco with 40% interest, Oryx Energy Co. 40%, and Amerada Hess Corp. and Petrobras U.S.A. 10% each.

  • 1 Mesquite wildcat on Vermilion Block 349 at 16,146 ft TD by operator Anadarko and Phillips, 50% each.

  • 2 Rhino wildcat on Ship Shoal South Addition Block 360 at 19,000 ft by operator Unocal Corp. and Conoco Inc., 50% each.

  • 1 Ship Shoal South Addition Block 250 wildcat at 17,774 ft TD by operator Japex (U.S.) Corp. and Vastar Resources Inc., 50% each.

  • 1 South Timbalier South Addition Block 289 wildcat at 18,034 ft TD by operator CNG Producing Co. with 22.5%, Mobil Exploration & Producing U.S. Inc. 30%, Louisiana Land & Exploration Co. 22.5%, and Vastar 25%.

Petrie Parkman speculated that the lull in subsalt drilling reflected a period in which operators were assessing the first round of subsalt wildcats and indicated recognition of the benefits possible from more seismic processing and interpretation before spudding more wells.

While the outlook for subsalt drilling in the gulf this year remained unclear, Petrie Parkman found reason to expect activity to begin ramping up.

The firm said, "Considering expiring blocks and farmout opportunities on acreage held by production-plus the large number of prospects leased at OCS Sale 147 and prospect generation in advance of the central gulf lease sale in May-a noticeable pick up in subsalt drilling activity is anticipated over the course of 1995."

PHILLIPS' SUBSALT ACTIVITY

Wells to date at Mahogany have been drilled through a six slot template on Block 349 by Sonat Offshore Drilling Inc.'s DF 97 semisubmersible rig.

Partners could elect to drill satellite wells in the field, pending results of delineation drilling as project development progresses.

Phillips last week said 3 Mahogany had found its main objective on Block 359-the zone underlying Block 349 that flowed 7,250 b/d at the 1 Mahogany wildcat. Crews were drilling toward deeper sands penetrated by 2 Mahogany, also on Block 349.

Partners planned to suspend 3 Mahogany as a future production well upon reaching TD. Following suspension of the well, the 4 Mahogany delineation well is to spud, also headed for a bottomhole location on Block 359.

Phillips Mahogany development manager John Murray said partners expect to drill three more wells before installing a Mahogany platform.

In addition to 4 Mahogany, Phillips this year could participate in as many as four more subsalt wells, including the:

  • 1 Monazite wildcat on Vermilion Block 375 operated by Anadarko with a 50% interest. Phillips owns the remaining 50%.

  • 1 Olivene wildcat on East Cameron Block 374 operated by Phillips with a 50% interest. Anadarko holds the remaining 50%.

  • 2 Teak appraisal well on South Timbalier Block 260 operated by Phillips with 50% interest. Anadarko has the remaining 50%.

  • 1 Alexandrite wildcat on Ship Shoal Block 337 operated by Phillips with 37.5% interest. Anadarko has 37.5%, Amoco 25%.

Anadarko leased the tract last April with a $40 million bonus at Minerals Management Service OCS Sale 147 for the central gulf (OGJ, Apr. 11, 1994, p. 36).

Terms of an area of mutual interest contract covering tracts surrounding Mahogany field allowed Phillips and Amoco in about mid-1994 to acquire interests in Ship Shoal Blocks 337 and 338. In addition, Phillips became operator of both tracts.

MAHOGANY COMPONENTS

Meantime, Brown & Root Energy Services is advancing detailed design and procurement activities for the Mahogany platform, an eight pile, 20 slot drilling, production, and quarters structure.

Detailed engineering and procurement are to be complete by September.

The Mahogany platform's deck is to include three levels.

Topsides processing capabilities based on fairly standard Gulf of Mexico technology are to include oil-gas-water separation, crude oil dehydration, compression for flash gas and sales gas, and typical testing facilities. Quarters are to accommodate as many as 26 persons.

Partners last week were evaluating several options for moving production to shore. Sales pipeline diameters and lengths will depend on route selection, a decision expected within the next couple of months.

Partners expect to award a platform fabrication contract in May, with agreements covering platform and pipeline installations to follow soon.

Brown & Root last summer finished feasibility engineering for the project, on time and under budget in part because of initiatives aimed at improving productivity and efficiency. The initiatives included:

  • A quality management system incorporating company policies, business practices, and process coordination and work methods.

  • A project implementation model providing a system to integrate company engineering tools, systems, and quality management into project applications.

  • A complementary advance planning process that matched priority work with resources.

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