Exploding the Myths of the Gulf of Mexico Deep Shelf; a Commercial Assessment of Deep Shelf Returns

Ian L. Ashcroft, Valerie Brett, and Andrew Latham
Wood Mackenzie Ltd., Edinburgh, UK

The Deep Shelf of the Gulf of Mexico is primarily a gas play. Interest has intensified since year 2000. Many companies now describe the site as a core element of their upstream strategy.

The play has been examined so as to provide a reliable, independent assessment of the relative merits of actual and prospective investments. The objective has been to determine full cycle economics including an estimate of the returns of leading companies. For years’ 1990 to 2002, all drilling in federal shallow waters are analyzed for primary objectives lying below 15,000 feet, true vertical depth.

A refined well classification has been developed that analyzes exploration activity and success levels. It screens out those wells that penetrated deeper than 15,000 feet, true vertical depth, but had primary objectives in shallower intervals. This approach provides an assessment of true exploration success rates and finding costs.

Results are for the entire deep shelf, and also for geologic province, protraction area, year, and reservoir depth. Individual field cash flow models have been constructed for over 90% of the reserves discovered for the period of study. Lower cutoffs for field size were 20 billion cubic feet equivalent. Economic analysis of each of field allows comparison of capital and operating costs, reserves, start-up year and a variety of economic indicators.

The analysis focuses on 25 leading companies, using a combination of drilling activity and reserves’ criteria. These companies are assessed in terms of exploration and development activity, reserves and production profiles, business value and full cycle returns.

AAPG Search and Discovery Article #90032©2004 GCAGS 54th Annual Convention, San Antonio, Texas, October 10-12, 2004