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    1. Regional Reports
    2. US & Gulf of Mexico

    Market downturn prompts decline in deepwater discoveries

    Feb. 1, 2021
    With drilling activities significantly curtailed, operators announced only a handful of deepwater discoveries in the Gulf of Mexico over the past year.
    (Courtesy Pacific Drilling)
    The drillship Pacific Khamsin drilled the Monument exploration well to a TD of 33,348 ft (10,164 m).
    The drillship Pacific Khamsin drilled the Monument exploration well to a TD of 33,348 ft (10,164 m).

    Offshore staff

    With drilling activities significantly curtailed, operators announced only a handful of deepwater discoveries in the Gulf of Mexico over the past year. Perhaps the most notable of these was the Monument discovery in the central US Gulf of Mexico. The results of the exploration well were announced in April by Equinor and co-venturers Progress Resources USA Ltd. and Repsol E&P USA Inc.

    Drilled in Walker Ridge block 316, the well found about 200 ft (60 m) of net oil pay with good reservoir characteristics in Paleogene sandstone. This provides an early indication of the productive reservoir interval at the well location, the company said.

    The drillship Pacific Khamsin drilled the well to a TD of 33,348 ft (10,164 m). Water depth is about 6,234 ft (1,900 m).

    Bjørn Inge Braathen, senior vice president of Exploration in North America, said: “We are pleased to have proved an accumulation of movable hydrocarbons in the Monument exploration well. However, determining the full potential of the discovery will require further appraisal drilling.”

    Monument is Equinor’s first operated exploration well in the US Gulf of Mexico since 2015. Equinor has a strong footprint in the US Gulf of Mexico, largely in non-operated assets, but the company has indicated plans to become an operator in the region, with growth focused on Paleogene-rich resources. Wood Mackenzie said that it expects the Monument well to be commercialized, but added that Equinor will have to overcome technical challenges “with the complex and often compartmentalized Paleogene reservoir.” Based on the drill depth of more than 32,000 ft, the discovery could be similar to other ultra-high-pressure fields requiring 20,000 psi-rated equipment which indicates significantly higher development cost.

    Meanwhile, LLOG Exploration Co., L.L.C. has announced the advancement of its Taggart and Spruance discoveries and related field development. Last summer, LLOG sanctioned its Taggart discovery and signed a production handling agreement for development via tieback to the Williams-owned Devils Tower spar in Mississippi Canyon block 773 in the Gulf of Mexico.

    The Taggart discovery is on Mississippi Canyon block 816 in about 5,650 ft (1,722 m) of water.

    The Mississippi Canyon 816 #1 discovery well was drilled in 2013 to a depth of 11,562 ft (3,524 m) and encountered 97 ft (30 m) of net pay in two Miocene objectives. Two subsequent appraisal wells were drilled in 2015 and 2019 and encountered 147 ft (45 m) and 84 ft (26 m) of net pay, respectively. Initial development plans include the completion and tieback of two wells with first production expected in 2022. 

    In October, LLOG reported continued successful drilling results at its Spruance discovery and finalization of development plans for the field. Spruance is in Ewing Bank blocks 877/921 and was initially discovered by LLOG and its partners in mid-2019 via a subsalt exploratory well in 1,600 ft (488 m) of water. The EW 877 #1 well was drilled to a total depth of 17,000 ft (5,182 m) and logged about 150 net ft of oil pay in multiple high-quality Miocene sands.

    A second well, EW 921 #1, was drilled from the same surface location as the discovery well to a total depth of 16,600 ft (5,060 m) in early October. The well delineated the main field pays and logged additional oil pay in the exploratory portion of the well, finding a total of more than 200 net ft of oil.

    Both wells are scheduled for completion in 2021, with first oil sales scheduled for early 2022.

    In July 2020, LLOG and its partners signed a production handling agreement for the processing of Spruance reserves via a 14-mi (23-km) subsea tieback to the EnVen-operated Lobster platform in Ewing Bank block 873. The Lobster platform is located 130 mi (209 km) south of New Orleans in 775 ft (236 m) of water.

    Despite the downturn in E&P activity in the Gulf, federal lease sales continue to draw significant industry interest. Lease Sale 256, held in November, generated $120,868,274 in high bids for 93 tracts covering about 79 million acres (123,438 sq mi) in federal waters of the Gulf of Mexico, according to the Bureau of Ocean Energy Management.

    Twenty-three companies submitted $135,558,336 in total bids.

    Lease Sale 256 included 14,862 unleased blocks located 3 to 231 mi (5 to 372 km) offshore, in the Gulf’s Western, Central and Eastern Planning Areas in water depths ranging from 9 to more than 11,115 ft (3 to 3,400 m). Some of the more notable bids included:

    • Shell Offshore Inc. submitted 21 high bids totaling $27,877,809.
    • EnVen Energy Ventures LLC submitted 13 high bids totaling $7,699,000.
    • BP Exploration & Production Inc. submitted 10 high bids totaling $17,130,319. The company’s highest bid, $7,300,311, was for the deepwater Green Canyon block 327.
    • Chevron U.S.A. Inc. submitted 10 high bids totaling $17,098,072. Its highest bid, $3,930,007, was for Viosca Knoll block 908.                                                                                                                                  
    • Repsol E&P USA Inc. submitted nine high bids totaling $6,437,891.
    • Murphy Exploration & Production Co. submitted eight high bids totaling $5,324,248.
    • Equinor Gulf of Mexico LLC submitted seven high bids totaling $22,158,274. The company’s and sale’s highest bid, $11,999,979, was for the ultra-deepwater Walker Ridge block 365.
    • Anadarko US Offshore LLC submitted four high bids totaling $6,475,357. Its highest bid, $3,006,215, was for the ultra-deepwater Keathley Canyon block 920.
    • LLOG Exploration Offshore L.L.C. submitted four high bids totaling $1,383,312.
    • Renaissance Offshore LLC submitted four high bids totaling $473,000.
    • Arena Energy LLC submitted three high bids totaling $446,650.
    • Hess Corp. submitted two high bids totaling $3,695,852. The company’s highest bid, $2,507,926, was for Green Canyon block 288.
    • Talos Energy Offshore LLC submitted two high bids totaling $2,933,741. Its highest bid, $2,761,234, was for the deepwater Viosca Knoll block 1000.