A new Westwood report reviews exploration potential across both the US and Mexican sides of the deepwater Gulf of Mexico. The Industry and Government are hoping for a bonanza of oil discoveries in Mexican waters of the Southern Gulf of Mexico but could be frustrated by the complex and variable geology which is quite different from the prolific US waters to the north.

In the last 10 years, exploration activity in the deepwater (>500 m) Gulf of Mexico (GoM) has been focused in the northern waters of the GoM. Big discoveries have been plentiful but the geology in new plays has been challenging with lower commercial success rates and developments taking more than 10 years to first oil. Will the frontier deepwater plays being targeted in the Southern Mexican GoM deliver different results?

In the US Northern GoM, high impact drilling remains focussed on the Paleogene (Wilcox) and Jurassic (Norphlet) plays

Since 2008, the deep water GoM delivered an average of two high impact discoveries per year in frontier and emerging plays, accounting for over 75% of the discovered volume.

The focus has been on the Paleogene Wilcox plays of the Northern GoM and Perdido Fold Belt, which both emerged during the early 2000s, with 3.2 bnboe of commercial discovered since 2008. Two new plays were also opened in the last decade; the Upper Jurassic Norphlet play and the Pliocene ‘Outer Ramp’ sub-salt turbidite play of the Northern GoM.

Middle East Land Rig Market Top Contractors, Country Share, Fleet HP CategoryFigure 1: Gross wells, commercial (CSR) and technical (TSR) success rates and volumes discovered in the emerging plays discussed in the report (2008-present)
Source: Westwood Global Energy

The emerging plays in the US Northern GoM can still deliver commercial discoveries despite development technology challenges

Challenging reservoirs and extreme high pressure and temperature (HPHT) conditions have limited commercial success rates to only 16% in the Northern GoM Paleogene Wilcox play. On average, more than 10 years has been needed to bring Paleogene Wilcox discoveries on production and all but one of the discoveries made since 2008 are currently stranded. The Paleogene play needs discoveries with in-place volumes of >2 bnboe to be commercial with current technology. The limited number of remaining prospects of this size casts a shadow over the play.

High Temperatures have also challenged development of the Upper Jurassic Norphlet play. The new high temperature technologies developed to produce the Appomatox field, discovered in 2010, will soon be tested, with first oil expected in 2020.

The two-high impact Norphlet discoveries (Dover and Ballymore) made in early 2018 and the high impact Whale discovery in the Paleogene Perdido Fold Belt made in 2017 are a reminder, however, that emerging plays in the Northern GoM can still deliver.

IOC’s set to spice up frontier exploration in the Southern GoM, but geological risks remain

The deepwater Southern GoM remains largely frontier. Exploration drilling in Mexico had been exclusively operated by Pemex until acreage was opened to International Oil Companies (IOC’s) in 2013. In deepwater licence rounds held in 2017 and 2018, 27 blocks were awarded to 17 different companies who committed to drill 31 wells. Each Mexican block is equivalent in size to approximately 100 US GoM Blocks (Figure 2). The Miocene turbidite play of the Campeche Salt basin was the most sought after, and the potential scale of this fairway should make it the focus of future exploration drilling campaigns.

NOV Rig Technologies Ending Backlog, Global Onshore Drilling & Well Services Expenditure, and Global Active Rigs, Q1 2015-Q2 2018
Figure 2: Map of blocks and wells committed to during Mexico Licence Rounds 1.4 and 2.4
Source: Westwood Global Energy

The Southern GoM is not a direct analogue to its conjugate in the North. Tectonic processes related to Pacific plate motions contribute to making this part of the GoM structurally more complex. Reservoir systems are more confined and are fed by less extensive river systems that bring sediments from highly variable provenance areas into the GoM. Despite the lack of exploration to date there are large numbers of potential traps and plays to explore. The challenge for explorers is finding commercial sized accumulations with a bonanza of new high impact discoveries in the south, far from guaranteed.

Vikesh Mistry, Analyst, Global Exploration Research
vmistry@westwoodenergy.com or +44 (0)20 3794 5384

This is an extract from a recently published report on Westwood’s Wildcat service: “Frontier and emerging plays of the deepwater Gulf of Mexico”.

To arrange a demonstration of the Wildcat service or to purchase the individual report, click here or contact:

Rhona McFarlane, Head of Global E&A Sales    
rmcfarlane@westwoodenergy.com or +44 (0)20 3794 5381