London Evening Lecture Review
$50 Oil; The Catalyst for Ultra-Deep Water Exploration
with Neil Hodgson, Spectrum
Review by Ricki Charles, PESGB Vice President, Royal Dutch Shell
Filled with energy following the May Bank Holiday weekend and un-distracted by any decisions to be taken in the polling booth two days hence, PESGB members gathered in number on 5th May to welcome Dr Neil Hodgson of Spectrum to the PESGB Evening Lecture. Neil joined us this month to share some of his thoughts on whether recent low oil prices provide the industry with a catalyst to explore for global-scale oil fields in ultra-deep water environments.
Neil’s pedigree is strong, having been involved in exploration since the mid-1980s working with BG, BP and Premier Oil before directing a small exploration company. Although currently in a senior management position as Executive Vice President with Spectrum Geo, Neil demonstrated through his enthusiasm to the gathered PESGB brethren that he retains a strong passion for geology, no doubt buoyed by unrestrained access to a large, modern and high-quality multi-client seismic data library.
It was important up-front to get some definitions right and to ensure the audience shared the same perspective on the classification of “deepwater”, after all this can be somewhat context-dependent. To Neil, this is defined as any water depth greater than 3,000m, a view shared by many majors exploring in these environments. Super-majors such as Shell, Chevron and Petrobras have pioneered deep water exploration and development, gaining their (often bitter) experience in stepping out to 3,000m in increments along a 30+ year learning curve, and justifiably boast about their achievements using snazzy graphics shared at conferences, through marketing material and on their websites. The current world record holder for drilling in the deepest water is ONGC, having successfully drilled in 3,174m of water by leveraging the experience of their drilling contractor, Transocean.
But why does $50 oil represent a good opportunity to explore in ultra-deep water (UDW)? Neil proposed this is because of a combination of acreage disposal and fundamental economic concepts. Firstly, operators could “retrench” back up the shelf to less risky prospects and dispose of UDW acreage. Secondly, an over-supply of rigs over the next 4-5 years could see bare rig rates fall to a level last seen in 2005, at which point it might be possible to drill UDW wells for around $50mln.
Neil reminded the audience that the 3,000m iso-bath is still on the shelf along the West African margin, with the majority of the remaining material prospectivity likely to be at water depths of 4-4,500m. He then guided the audience on a whistle-stop tour of the South Atlantic margin basins on both conjugates and assessed the status of the key play elements in various countries.
He suggested the presence of a rich source rock deposited during the Aptian, when the South Atlantic was a restricted ocean, separated from the wider ocean environment by the South Falkland platform and asserts these conditions enabled the deposition of a high quality and widely distributed oil-prone source rock. Neil argued this concept has partially de-risked the oil play in the Namibia deep-water in three well penetrations.
What about reservoir in the far offshore deep water? Not a problem, says Neil. There is up to 4 seconds of sediment conformable above the Aptian source rock across the basin, although in some places salt may impede charge to shallower reservoirs. He highlighted a paper from Shell in which a statistical analysis of 86 deep-water discoveries, and divided the reservoirs into slope deposits and apron fan complexes. The slope reservoirs constitute 52 examples, with an average size of 100 mmbbl and a POS of 0.1, whilst the apron fan complexes number 38 have an average size of 930 mmbbl and POS of 0.3. Trapping is likely to be stratigraphic, but this could be out-board rather than up-dip, as seen in the Pelotas basin. This significantly reduces the risk of up-dip thief zones.
The depo-centres for these thick sediment successions are created by thermal sag of oceanic crust close to the continent/ocean boundary and Neil argues this provides an opportunity for plate-tectonic-scale, or “Titan-class”, prospects. He demonstrated on some of his own company’s recent data sets examples from around the basin, including the Orange Basin offshore South Africa, offshore Gabon and its conjugate in the Sergipe Basin where the Aptian source has been penetrated and seen to have TOC of 3-5%, up-dip reservoir seals and estimated 1 billion bbls of light oil. Neil also shared examples from Mauritania and Senegal which has been the subject of renewed exploration.
He showed a series stunning regional seismic lines to illustrate the crustal-scale geometries, both in time and with the water-wedge removed to show some remarkable structures and stratigraphic relationships in depth, with some examples displaying amplitude/AVO anomalies.
Neil concluded his talk by encouraging explorers to be quick – this may be a rare opportunity to explore for “some of the biggest prospects” he has ever seen in a narrow window before rig rates start to escalate again. “Seize it now!”