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Consultant: 2007 Saw Deepwater Gulf Disappointment

The contribution of exploration in 2007 to the Gulf of Mexico (GOM) deepwater's reserve base was the lowest in the past decade, according to a new report by consultant Wood Mackenzie. Reserves found amounted to only 553 million boe -- less than half the reserves found in 2006.

Moreover, of the reserves discovered last year, just 229 million boe have been deemed commercial -- or 41% of the total reserves discovered. "We attribute the lower level of exploration activity during 2007 in part to higher levels of appraisal and development drilling activity coupled with the tight rig market," said study author Hugh Hopewell, Wood Mackenzie upstream analyst.

The report showed that a total of 38 companies participated in the drilling of 34 wells, which is less than the long-term annual average of 43 wells per year. Of note was that while exploration activities fell in 2007 from a peak in 2006, total well activities remained steady during the same period. Overall, 41% of the wells were successful, lower than the long-term average of 44%. Also of interest is that relatively few of these wells targeted the deeper, more complicated plays, and as such the overall average drill time per well, at 71 days, was shorter than in the previous year.

Although the results were generally low, Hopewell cautioned against viewing them too critically and making straight comparisons with 2006's unusual exploration successes (see NGI, Feb. 5, 2007).

"The 2007 results were not far short of other quiet exploration years, such as 2001, 2004 and 2005. It is likely that exploration drilling will pick up in the future, spurred on by a combination of factors, including increased rig availability, further prospect identification from ongoing seismic analysis, and the availability of new acreage to drill following the large acquisition of leases during the 2007 lease sales," Hopewell said.

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