Coastal lists Smackover, Sunniland objectives in gulf off Florida

Coastal's Prospects Off Florida

The company is in a many-year legal fight with the state to drill on an 880,000-acre band of leases between 7 and 10 miles off the coast from Apalachicola to south of Naples. Coastal said the leasehold is "basically out of sight of Florida's pristine beaches."

Various state agencies have attempted without success to impose bonds in amounts from $500 million to $1.9 billion. Earlier this year the state Department of Environmental Protection, formerly Department of Natural Resources, published a notice of intent to issue a drilling permit. That allowed more legal challenges.

After a state administrative judge scheduled a hearing to start Sept. 29, the legislature passed a law that provided for a bond that has been set at $4.3 billion. Coastal plans to challenge, saying a $35 million "standard federal drilling bond" is adequate.

Coastal, a unit of Coastal Caribbean Oils & Minerals Ltd., New York, has been conducting detailed geologic studies and surveys for about a year. The resulting data are designed to pinpoint drilling prospects (see map). Coastal is not related to Coastal Corp. of Houston.

St. George Island area

Coastal said the prospect has the potential to become the largest U.S. discovery east of the Mississippi River. It said the prospect has geologic closure over 46,000 acres, more than four times that of giant Jay oil field in the Florida Panhandle.

Jay field, discovered in 1970, was the largest U.S. discovery since supergiant Prudhoe Bay oil field on Alaska's North Slope.

Jay field has produced more than 400 million bbl of oil and is expected upon depletion to have recovered 492 million bbl, 60% of its original oil in place in Jurassic Smackover at about 15,500 ft. It has 161 wells on 14,000 acres.

St. George Island prospect could hold 2.19 billion bbl in place. At 25% recovery, this would be a field of 618 million bbl ultimate recovery, requiring six platforms and 109 wells, Coastal said.

The $5 million cost of an 18,000 ft exploratory well "would make it necessary for the company to seek a partner or raise additional capital," Coastal told shareholders this month.

The prospect lies 170 miles southeast of Jay field and a simlar distance east of a gas discovery 25 miles off Pensacola. This discovery, by a group led by Chevron USA Production Co. in the Destin Dome area, is attributed reserves of more than 1.5 tcf of gas in Jurassic Norphlet.

No discovery is guaranteed without drilling, but the St. George Island prospect has positive geologic indicators. Coastal said, "The Smackover formation at this depth should contain mature hydrocarbons. The structure appears to be an effective trap with four way dip closure. The prospect is sealed with anhydrite above and below. Porosity and permeability of the Smackover (are) excellent in nearby regional wells."

Other prospects

The company said it selected the sites "solely on the basis of their oil and gas potential from the company's geologic database, and not for any 'shock effect' or attempt to galvanize a buyout of the leases."

Locations 3 and 4 have oil as an objective in Cretaceous Lower Tuscaloosa sandstone with secondary objectives in the Lower Cretaceous and Paleozoic.

Locations 5 through 11 are designed to test the Lower Cretaceous Sunniland formation. Sunniland limestone produces or has produced oil from several fields in Lee, Hendry, and Collier counties in the South Florida basin. Additional targets are the deeper Brown dolomite with secondary objectives in the Trinity D and Pumpkin Bay formations, all of Lower Cretaceous age.

Coastal said it picked the location of the southernmost planned well to test a deep natural gas play indicated on its seismic data.

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