Resource estimate climbs on Pacific OCS

The Pacific federal offshore region may contain three times as much oil (11 billion bbl) and almost twice as much gas (19 tcf) as previously estimated in 1990, the U.S. Minerals Management Service has reported.

About 85% of those totals is considered undiscovered, and half of that could be developed "under existing economic conditions," said J. Lisle Reed, MMS Pacific Region director.

Those conclusions are in an updated assessment conducted by MMS in cooperation with the oil industry as part of a national analysis. MMS and the U.S. Geological Survey previously published similar but less comprehensive reports for other parts of the U.S.

Alaska's undiscovered resources come in at 53% of the nation's presumed total, followed by the Pacific Region with 23% and the Gulf of Mexico with 18%, for a total of 45 billion bbl of oil and 268 tcf of gas.

Latest assessment

The technical assessment consists of 46 petroleum geologic analyses ("plays") over 13 areas (Fig. 1 [161,742 bytes], Table 1 [344,730 bytes]).

Three classes of plays are: established, or those in which hydrocarbons have been discovered; frontier (hydrocarbons detected); and conceptual (hydrocarbons suggested by geologic data).

The report, released in late January, is entitled "The 1995 National Assessment of U.S. Oil and Gas Resources-Assessment of the Pacific Outer Continental Shelf Region." It was started in 1992 and uses Jan. 1, 1995 as the benchmark date.

Study findings

The best potential areas, those that contain mean estimates of more than 1 billion bbl of oil, are identified in the Point Arena, Santa Barbara-Ventura, Bodega, and Oceanside-Capistrano basins (Table 2 [194,020 bytes]).

Regions that contain mean estimates of more than 1 tcf of gas are assessed in the Santa Barbara-Ventura, Washington-Oregon, Point Arena, Eel River, Bodega, Oceanside-Capistrano, and Cortes-Velero-Long basins.

And the areas that may be the most economical to develop lie in basins off the Santa Barbara-Ventura area -currently the biggest Pacific OCS producer-and Bodega basins, where only exploratory wells have been drilled.

The latest mean estimate of undiscovered, conventionally recoverable resources totals 10.71 billion bbl of oil and 18.94 tcf of gas. MMS figures that chances are 95% that the total area contains at least 8.99 billion bbl of oil and 15.21 tcf of gas and 5% that it might contain as much as 12.62 billion bbl and 23.19 tcf.

MMS, by combining cumulative production, reserves as of Jan. 1, 1995, and the latest resource assessment, arrived at a total endowment for the total area of 12.77 billion bbl of oil and 22.07 tcf of gas (Table 3 [110,346 bytes]).

Assessment analysis

The higher estimates of resources, compared with 1987 and 1990 assessments, are due to better data and methods and counting less significant formations, said Catherine Dunkel, a geologist with MMS who authored the report and is part of an 8-member team.

The biggest surprise and "a significant contributor" to the larger figures came from recognition of additional petroleum source and reservoir rocks, Dunkel said, specifically higher volumes in fractured siliceous Monterey reservoir rocks, also referred to as Neogene fractured siliceous rocks.

The higher estimates for both oil and gas resources were most dramatic in the Central Coast, Santa Barbara-Ventura basin, and the Inner Borderland province. The only notable decrease in a gas estimate was in the Pacific Northwest province.

Although virtually all regions were deemed to have more resources, the actual proportion of undiscovered conventionally recoverable resources that could be economically recovered decreased, Dunkel reported, particularly in the Outer Borderland area for oil and, for gas, the Pacific Northwest and Outer Borderland provinces. That is attributed "to the recognition that most potential fields exist at greater water depths than previously believed," the report concluded.

Another part of the report compared what could be economically extracted at $18, $25, and $50/bbl of oil and comparable prices per thousand cubic feet of gas (Table 4 103,747 bytes]).

Just the facts

Decision makers need to know where the oil is, MMS's Dunkel said.

"This sort of analysis has not been done before," Dunkel said, citing the industry's "eager" cooperation in sharing data culled from 1,100 offshore wells and 200,000 miles of seismic reflection profiles.

The report aimed at technical and economic information, purposely ignoring California's usually antioil politics. That is being addressed separately in a series of public hearings through Mar. 18 via the unique California Offshore Oil and Gas Energy Resources study (Cooger), a multimillion dollar cooperative experiment among local, state, and federal agencies, the oil industry, and public.

Cooger was created in 1995 by MMS as a way to address intense local objections to offshore oil and define development options that might be more acceptable, like extended reach drilling to minimize the need for new platforms. Public hearings are focused in Santa Barbara, San Luis Obispo, and Ventura counties, where the lion's share of oil and gas lie offshore in undeveloped leases.

Leasing outlook dim

Despite the dramatically increased resource estimates, no new lease sales are pending on the Pacific OCS, at least until 2002, and political and price restraints will likely keep the treasure in place for the near future.

MMS is currently concentrating only on the 40 existing undeveloped leases and doesn't intend to propose anything until public hearings on the unique Cooger study are finished later this year.

In fact, Reed was careful "to emphasize that the results of this assessment ... do not signify MMS's intention to pursue or promote additional leasing in the Pacific" but rather promote "improved knowledge and understanding."

Companies interested

When the Cooger study is finished, "there will be serious evaluations and more activity within a few years on undeveloped leases," said Frank Holmes, head of the Western States Petroleum Association's (WSPA) California branch.

Most proposals will likely be by the big independents, he predicted, especially by leaseholders Torch, Same- dan, and the new Aera Energy LLC, based in Bakersfield, Calif., and formed last year from Mobil and Shell assets to become the largest producer in the state.

The current big producers in the OCS, like Chevron and Exxon, are looking overseas, and Unocal and others have sold much of their California assets to independents.

Holmes said WSPA "does not agree or disagree with the specific numbers" in the MMS assessment, and Dunkel added she has not received "any critical response to the numbers, probably because of the involvement of the oil companies" in compiling the data.

"We are not proponents of leasing in a particular place," Dunkel emphasized.

Will anyone drill?

Whether or not oil and gas companies will take advantage of the higher resources is an enigma, at least until the Cooger study is finished, Holmes said. He noted California "is probably the most heavily regulated area (in the nation), which adds cost and risk."

What could help that is MMS's desire to "foster cooperation rather than be a lightning rod for controversy," according to past statements by President Clinton, by including the state and local governments early in offshore development planning.

The Cooger study will be the key test, along with the MMS's approach to phase in development on existing, undeveloped leases, possibly share royalty revenue, use extended reach drilling, and cooperation from oil companies in sharing proprietary data.

Bibliography

Schmoker, James W., and Dyman, Thaddeus S., How perceptions have changed of world oil, gas resources, OGJ, Feb. 23, 1998, p. 77.

Grace, John D., U.S. resource estimates give insights to key oil, gas plays, OGJ, Mar. 31, 1997, p. 80.

Grace, John D., Resource assessment analysis identifies 21st century plays, OGJ, Apr. 14, 1997, p. 97.

Grace, John D., Resource data provide insights into U.S. exploration risk, OGJ, Apr. 28, 1997, p. 84.

U.S. Geological Survey National Oil and Gas Resource Assessment Team, 1995 National assessment of U.S. oil and gas resources, USGS Circular 1118, 1995, 20 p.

Petzet, G.A., Partial (onshore) U.S. oil, gas resource volumes termed 'astonishing,' OGJ, Mar. 6, 1995, p. 84.

Woods, Thomas J., Alaskan oil and gas prospects: boom or bust?, OGJ, Feb. 14, 1994, p. 91.

Fisher, William L., How technology has confounded U.S. gas resource estimators, OGJ, Oct. 24, 1994, p. 100.

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