California offshore explored with extended-reach wells

May 12, 2000
Oil and gas companies are stymied from developing new leases off the California coast because of state and federal moratoria, but that doesn�t mean they�re sitting on their wallets.

Oil and gas companies are stymied from developing new leases off the California coast because of state and federal moratoria, but that doesn�t mean they�re sitting on their wallets (OGJ, Nov. 1, 1999, p. 36). Some are literally extending current projects by drilling extended-reach wells into neighboring subsea strata and breaking records in the process.

ExxonMobil Production Co. claims it recently set a national record for offshore extended-reach drilling in the Sacate field from its Platform Heritage. It also claims the world record for an extended-reach well in water depths greater than 700 ft.

Sacate No. 1 was drilled to 21,720 ft TD with a vertical depth of over a mile (6,083 ft) and a lateral reach of over 3 miles (18,688 ft). That project is providing the company an additional 2,500 b/d of oil. ExxonMobil intends to drill more wells in Sacate field, which officials estimate contains recoverable reserves of 50 million boe.

The company�s Santa Ynez Unit, consisting of three offshore platforms�Heritage, Harmony, and Hondo�is producing about 60,000 b/d of oil and 65 MMcfd of gas, processed at its onshore Las Flores Canyon plant, about 15 miles west of Santa Barbara. ExxonMobil originally planned to build a fourth offshore platform, but advances in extended-reach drilling technology made it unnecessary, especially now that the Sacate No. 1 well has proved successful. It also avoided the inevitable political war that would surely ensue with proposing another platform.

�This cost-effective development option did not require additional offshore structures or subsea facilities,� said Bob Davis in ExxonMobil�s Houston office. Davis said the well cost $15 million to drill. It began producing Nov. 15.

Other extended-reach projects
ExxonMobil isn�t the only company using existing platforms and creative techniques to increase oil and gas production off the California coast, due to the higher price of oil and lower cost relative to building new infrastructures. Some are successful despite the ever-present political climate that is decidedly antioil, from the region�s US Rep. Lois Capps (D-Calif.), to state Gov. Gray Davis, and to a majority of the state coastal commission and Santa Barbara County Board of Supervisors.

The new owners of the Point Arguello project�the Arguello Inc. consortium, led by operator Plains Resources Inc. and Phillips Petroleum Co., each holding a 26% interest�hope to increase their current production of 21,000 b/d with extended-reach drilling to tap into an undeveloped offshore reserve called Rocky Point from existing platforms. Chevron Corp. was the former operator.

The new owners hope to process any new production on an offshore platform instead of the onshore plant, which is currently used only to heat oil for transport. That facility is about 25 miles west of Santa Barbara. Arguello officials intend to submit a formal application for that project within a month or so.

Nuevo Energy Co. also is applying to expand the Point Pedernales project, originally developed by Unocal Corp., off Santa Barbara�s North County shores. Nuevo intends to use extended-reach drilling to acquire oil in the Tranquillon Ridge reserve in state waters from Platform Irene, which is in federal waters beyond the 3-mile limit. Processing would take place onshore at an oil and gas plant at Lompoc, Calif.

If approved and successful, Nuevo may increase the life of the Point Pedernales project by 15 years. And because the drilling would tap into state tidelands, royalties would accrue to both the county and state�potentially as much as $50 million for the county alone.

The extended-reach technique doesn�t always work. Searching for oil and gas is still risky, despite all the advanced technology available. Benton Oil & Gas Co. took a $12.3 million write-down in the last quarter of 1999 from a project it was drilling from onshore, adjacent to the Point Arguello plant, to offshore waters in a search for sweet gas that didn�t pan out. Benton�s project was watched closely by state officials for success because it was seen as perhaps the only politically acceptable way to develop new oil or gas projects in state waters (OGJ, May 4, 1998, p. 118). Any proposal for a new platform within the 3-mile limit would stand no chance of approval from the Davis administration.