Davy Jones Discovery – A New Frontier For Gulf Of Mexico

Recently, an “elephant” discovery was found by McMoRan and their partners, Plains Exploration & Production and Energy XXI. This development, found in 20 feet of water 10 miles south of Marsh Island, could possibly bring a new era of exploration to the Gulf of Mexico shelf.

As many know, for nearly a decade exploration has been in a steady exodus from the Gulf of Mexico. In 2001 the average number of rigs drilling in the Gulf of Mexico was 148. This past July, the rig count hit a historic low of 25 rigs.

In the past decade, the oil and gas industry has seen a migration from the exploration of conventional to non-conventional resource plays. To give a little background, a conventional well is predominately a vertical well drilled to a producing zone that flows under its own pressures. A non-conventional well is one that is drilled to a zone that has tight production and, for the most part, is uneconomical without the utilization of processes like hydraulic fracturing and horizontal drilling. As an example, the Haynesville Shale in North Louisiana is a non-conventional resource play. Drilled vertically, the Haynesville is not economically productive. However, with a 4,000-foot lateral, the economics work.

A better way to define a non-conventional source is a well that is not the norm. Of course, with inevitable advancements in technology, what is non-conventional today will become conventional tomorrow.

The recent McMoRan discovery has become a monumental resource find. The well was drilled to a depth of more than 28,000 feet, with bottom hole pressures near 25,000 pounds per square inch and temperatures greater than 400 degrees Fahrenheit. To put that in perspective, geological consultant Art Berman described the pressures by adding, “These are by far the highest pressures know in Gulf of Mexico wells, and almost 10 times the rocket engine chamber pressure required for spacecraft liftoff”.

Throughout my 45 years in the oil and gas industry, I continue to be amazed by our industry’s advancements in technology. For every frontier opened, such as the McMoRan Davey Jones prospect, new limits are reached. At a time when most oilmen believed the low hanging fruit in the Gulf of Mexico had been picked, a partnership of independent wildcatters opened this entirely new development.

According to John Schiller, CEO of Energy XXI, “The Davy Jones discovery verifies the ultra-deep potential of the Gulf of Mexico and opens this horizon as a major exploration frontier.” James R. Moffett, McMoRan’s co-chairman said, “We’re now very confident about not just the Davy Jones prospect…but all the other prospects.” Moffett continued by adding, “The find could be one of the largest discoveries in the shallow waters of the Gulf of Mexico in decades.”

Many in the industry are speculating just how big the Davey Jones discovery will be. In the coming months and years, additional wells will be drilled and the production will be put on-line. The development and extent of the discovery has the potential to be far reaching. Furthermore, the economic impact could be tremendous. Developed on state owned leases, this momentous development will most certainly benefit the State of Louisiana. The substantial direct and indirect economic impact could potentially fill the state’s coffers for years to come.

Don Briggs is President of the Louisiana Oil & Gas Association.

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