--> Abstract: Exploration and Development of Hydrocarbon Resource in the Gulf of Mexico, by P. K. Ray and G. L. Lore; #90987 (1993).

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RAY, PULAK K., Minerals Management Service, Herndon, VA; and GARY L. LORE, Minerals Management Service, New Orleans, LA

ABSTRACT: Exploration and Development of Hydrocarbon Resource in the Gulf of Mexico

The exploration and development activities in the Gulf of Mexico, which is predominantly a gas province, have steadily moved into deeper waters in the last two decades. To date, discoveries have been made in water depths exceeding 5,500 feet. Deeper water discoveries, however, face the economic constraints of larger minimum economic field sizes required for development. As the number of fields discovered annually increased for the established plays, the average field size of the Gulf of Mexico decreased from 139 MMBOE in the 50s to 14 MMBOE in the 80s. The average field size of the newly discovered plays is significantly higher. The truncated "S" shape of the production curve suggests that the Gulf of Mexico is far from being a mature province. Production projections based on the pres nt geologic exploration/development scenarios indicate that over 8 BBO of oil and 103 TCF of gas may be produced in the next 30 years. Shallow water deep lower Miocene plays, deep-water plays and subsalt plays are expected to be the major plays of the future.

The initial increase in leasing activity resulting from the introduction of area-wide lease sales in 1983 dropped to a catastrophic level in 1986, following the crude oil price crash. A reduction of the minimum bid in 1987 brought leasing activity back to the pre-1986 level. The impact of lowering the minimum bid on leasing was more pronounced on tracts with 10-year lease terms. Even though oil prices have stabilized in recent years, the leasing activity in 1992 dropped to the worrisome 1986 level. In addition, due to achange in the composition of bidders (majors/independents) more shallow water tracts and previously leased tracts are currently being leased.

The exploration activity as indicated by the number of exploratory wells drilled has followed a similar trend. To maintain healthy leasing and consequential exploration and development activities, and to achieve production to meet the nation's energy needs, innovative incentives need to be considered. Several alternatives to revitalize OCS leasing/exploration activities are currently being considered by the Minerals Management Service.

AAPG Search and Discovery Article #90987©1993 AAPG Annual Convention, New Orleans, Louisiana, April 25-28, 1993.