An appraisal well in the Lower Tertiary Trend of the deepwater Gulf of Mexico (GOM), as well as early results from some other ultra-deep prospects, are pointing to big reserves gains in the years ahead, according to energy analysts.

ConocoPhillips, which co-operates the Shenandoah WR52-2 prospect in Walker Ridge Block 51 with Anadarko Petroleum Corp., said last week the WR52-2 appraisal well encountered more than 1,000 feet of net pay in high-quality reservoirs. ConocoPhillips and Anadarko both have a 30% stake in the well; Cobalt International Energy LP is a 20% owner, while Marathon Oil Co. and Venari Offshore LLC each hold a 10% interest.

According to Citi analyst Robert Morris, the Shenandoah discovery may contain between 500 million boe and 1 billion boe. First oil and gas is anticipated in 2017.

“The potential of the Shenandoah discovery, combined with very positive indicators of hydrocarbons in the nearby Coronado well, further strengthens our position in the Lower Tertiary play,” said ConocoPhillips exploration chief Larry Archibald. “We believe this discovery could be material and, together with the doubling of our deepwater Gulf of Mexico acreage position in the last two years, reinforces our global exploration strategy of getting into the right plays early in their life-cycle. Today’s announcement is an important first step in demonstrating our ability to grow a high-value Gulf of Mexico portfolio through organic exploration.”

The announcement preceded the Department of Interior’s latest Central Gulf of Mexico lease sale on Wednesday, which offered, among other things, Walker Ridge prospects. The highest bid — $81.8 million for Walker Ridge Block 271 — was submitted jointly by Statoil Gulf of Mexico LLC and Samson Offshore LLC (see related story).

The Lower Tertiary Trend is one of the most promising areas of the GOM deepwater, and the Shenandoah region is considered a “mini basin,” according to Anadarko (see NGI, Feb. 25). The WR52-2 well, which was drilled to a total depth of 31,405 feet in 5,800 feet of water, is about one mile southwest and 1,700 feet structurally down-dip from the 2009 Shenandoah-1 discovery well (see NGI, Feb. 12, 2009). The initial discovery well encountered more than 300 net feet of pay.

“Log and pressure data collected in the Shenandoah-2 well indicate high-quality reservoir and fluid properties similar to those encountered in the discovery well,” said ConocoPhillips. “Logs indicate that the targeted Lower Tertiary sands were full to base with hydrocarbons and there was no evidence of an oil-water contact.”

The Coronado wildcat exploration well, in Walker Ridge Block 98, was drilled to a total depth of 31,866 feet in 6,127 feet of water. It is 190 miles off the coast of Louisiana and close to 12 miles southeast of the Shenandoah discovery.

“Results from the Coronado well are still being evaluated, and additional appraisal will be needed to determine the full extent of the resource,” ConocoPhillips said. It holds a 35% interest in the well while Chevron Corp. (40%) is operator. Other stakeholders are Anadarko (15%) and Venari (10%).

The early Shenandoah results once again show that “exploration matters and can make stock market differentiators,” said Tudor, Pickering, Holt & Co. Inc. “In a world where we don’t see the commodities as being a big upside catalyst in the near-term, owning exploration in the portfolio can drive some juice.”

ConocoPhillips has around 2 million net acres in the GOM’s deepwater, and one of its primary targets this year is the Shenandoah (see NGI, Dec. 11, 2012). This year it plans to drill up to eight wells, including its Ardennes prospect, spud this month, in which it partners with Cobalt. The Thorn well is scheduled to spud before the end of June. Thorn represents ConocoPhillips reentry into the deepwater GOM as an operator, it noted.

Chevron Corp. recently completed the first development well in the St. Malo Field of the Lower Tertiary (see NGI, March 4). Oil flow exceeded 13,000 b/d and was constrained by the test equipment. The test, in Walker Ridge Block 678, targeted sands more than 20,000 feet under the seafloor. St. Malo is being jointly developed with the Jack field; the two fields are within 25 miles of each other. Chevron has a 51% interest and is the operator. Other owners are Brazil’s Petrobras (25%), Statoil ASA (21.5%), ExxonMobil Corp. (1.25%) and Italy’s Eni SA (1.25%).

Cobalt also is seeing strong initial results from its North Platte No. 1 exploratory well in Garden Banks Block 959, which is within the Inboard Lower Tertiary Trend. Cobalt operates and holds a 60% interest in North Platte; Total E&P USA Inc. has a 40% stake. The exploratory well encountered more than 550 net feet of pay in “multiple” reservoirs, which compares favorably with a pre-drill estimate by DeGolyer and MacNaughton of 350 feet of net play.

North Platte is in 4,400 feet of water and was drilled to a total depth of 34,500 feet. Cobalt completed a bypass coring operation on the well and has since temporarily abandoned it. In addition, the Houston operator has begun acquiring 3-D seismic for the entire field, which is expected to be ongoing this year. “Appraisal plans for North Platte will be determined later in the year as well.”

“The exceptional results of both the Shenandoah appraisal well and the North Platte No. 1 exploratory well further substantiate our regional model of the prolific potential of the Inboard Lower Tertiary Trend,” said Cobalt CEO Joseph H. Bryant.

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