Reserves and Resources – Peak Oil Barrel

Update on the Wilcox in the Offshore Northern Gulf of Mexico

01/08/202201/08/2022 Bob Meltz 195 Comments

A guest post by Bob Meltz

I’ll start with a brief overview of some northern offshore GOM production statistics, and then review what I see as the current state of Wilcox exploration and development projects and finish by discussing Wilcox production data. All production statistics are from BSEE/BOEM.

Cumulative production from the federal waters of the offshore Northern Gulf of Mexico (OCS) through 2020 is 22.7 BB (billion barrels) oil and 190 tcf gas. First production was in 1947. Production from deepwater (defined by BOEM as water depths > 1000’) is 9.6 BB oil, and 22.9 tcf gas. The first deepwater production was in 1979 from Shell’s Cognac platform in 1025’ of water.

The current annual peak in offshore oil production was in 2019. Average production was 1.9 mmbopd. 2020 production averaged about 1.64 mmbopd. So far in 2021 through October average oil production has been about 1.67. With the near term queue of Miocene projects set to come online in 2022 (Mad Dog 2, King’s Quay and Vito), and the queue of Wilcox projects set to come online in 2024-2025 (Anchor, Whale and perhaps North Platte), I believe we will see another peak in production in 2 to 6 years, and this could even exceed the 2019 peak.

The Wilcox, sometimes also called the Lower Tertiary, was thought by many to be the future hope for the offshore Gulf of Mexico, providing long-term production for years. As the shelf and flex trends played out, and as the deepwater Miocene fields started playing out, the Wilcox was going to pick up the slack and keep offshore production going.

I co-authored a paper with several Chevron colleagues in 2005 that led to some of this initial enthusiasm. Here is a link to that paper.

View PDF (searchanddiscovery.com)

The article indicates potential from the play of 3 to 15 billion barrels of recoverable oil. The high-end estimate of 15 billion barrels of recoverable oil generated a lot of industry buzz at the time, but I’m glad we also included the low estimate of 3 billion barrels. As you will see later, I currently believe the ultimate recovery from the Wilcox will be closer to that low estimate.

The oil industry has faced many challenges in pursuing the Wilcox. Some include the technical challenges of drilling and completing these wells. In many cases, they are drilled through thick salt canopies onto total depths exceeding 30,000’. They are some of the deepest wells in the world, and often the top of the reservoirs are encountered below 25,000’. The deepest well in the GOM was a Wilcox test drilled by Chevron in 2013 to 35,935’ TVD_SS. Usually the Wilcox reservoirs are quite thick, often over 1000’ of gross reservoir thickness and over 500’ of net oil pay. Successfully drilling and completing these wells is not for the faint of heart.

So, after 20 or so years of exploration and 11 years of production, how has the Wilcox been performing?

First I’ll discuss the exploration story of the Wilcox.

Below is a simplified stratigraphic column showing the primary producing intervals of the offshore Gulf of Mexico.

Figure 1 – Simplified stratigraphic column for the offshore Gulf of Mexico

GoM Reserve Revisions for 2019

11/23/202111/23/2021 George Kaplan 323 Comments

A Guest Post by George Kaplan

Overview

For 2019 BOEM showed a large increase in remaining reserves of 1.3Gboe, 91% of it oil, from newly discovered oil with Appomattox/Vicksburg and Vito the largest contributors at over 400mmboe each, followed by Buckskin and Kaikias, which are fairly large multi-well tie-backs, and smaller, one or two well tie-backs of Blue Wing Olive, Constellation, Claibourne, Red Zinger and Stonefly. These discoveries were made with exploration wells between 2006 and 2016 but were only counted as reserves once firm development plans were put in place. Even given this the year in which BOEM includes the reserves is rather opaque and idiosyncratic, for example some of theses fields started production before 2018, and some developments, notably Kings Quay, are more advanced than Vito but are not included.

Other additions came from revisions to Thunder Horse, Atlantis, Mars-Ursa and Jack/St. Malo, which had major brownfield developments. The fields were not all added as discoveries or adjustments for 2019, but were spread over 2016 to 2019. Some other discoveries under development, such as Anchor, Whale and Ballymore, or in pre-FID studies, such as North Platte and Fort Sumter, will likewise be added against their discovery years as their estimates are finalised. Several of these projects are among the first to use new 20ksi wellhead equipment and it will be interesting to see what teething troubles are experienced.

Norway Part II – Production and Wellbores

10/23/202110/23/2021 George Kaplan 133 Comments

A Guest Post by George Kaplan

Annual Production

Overall Norwegian oil production peaked in 2000 but, thanks to the Johan Sverdrup discovery, it is heading for a secondary peak in the next couple of years. Phase I of the development started in 2019 and has design capacity of 440kboed (70kSm³/d) and Phase II is due in late 2022, raising the total capacity to 700kboed of which 535kbpd (85kSm³/d) is crude. The development uses predrilled wills over which the platforms are installed and tied-in, so ramp up was, for Phase I, and will be, for Phase II, rapid. To find a field this size in a mature basin (it is in the North Sea) is unusual, possibly unique so far in offshore oil developments.

For some years Troll has been the largest single oil producer, coming from horizontal oil wells exploiting the oil rim in one half of the field, but recently Troll III was started which produces from the gas cap above the rim, so oil production will now fall.

In the chart green bands are fields in the North Sea, blue-green those in the Norwegian Sea, and the couple of thin blue ones those in the Barents Sea. The 2021 values are only through July.

July US Oil Production Growth Slows

10/01/202110/01/2021 Ovi 211 Comments

A guest post by Ovi

All of the oil (C + C) production data for the US state charts comes from the EIAʼ’s Petroleum Supply monthly PSM. After the production charts, an analysis of three EIA monthly reports that project future production is provided. The charts below are updated to July 2021 for the 10 largest US oil producing states.

Norway 2021 Part 1 (of 2): Exploration, Discoveries and Reserves

09/24/202109/24/2021 George Kaplan 297 Comments

A guest post by George Kaplan

Remaining Reserves

The increase in remaining C&C reserves that has been seen over the last few years, and has come mostly from growth in Johan Sverdrup, has run its course and there was a significant drop in 2020, even as production continued to climb. The reserve replacement ratio has been 38%, 174%, -24%, -75% for 2017 through 2020.

The Norwegian NPD does not use the standard proven/probable/possible categories but based on the way growth occurs the dark colours are close to a P1 reserve number (producing or in development in NPD terms) and the light colour represents a resources or a P3 value (production in clarification or production likely but not yet evaluated). Growth mostly is given by moving resources from the light areas to the dark. New discoveries are usually initially added to the resources.