ABSTRACT

Economic development, management and evaluation of deep reservoirs in South Louisiana have always been a challenge for petroleum professionals, management and investors. The high expense and unknown parameters associated with deep new discoveries can be a burden to even well financed exploration firms. The question presented after a new field discovery has always been, "how much did we find, and where do we drill next?" Economics have changed so dramatically in the last 15 years that there is little room for error in evaluating what has been found and how to develop a new deep expensive field. Successful field development is getting the most out of the ground with the minimum number of wells.

Locating the confirmation well to an expensive wildcat discovery should generate a serious dialog between management, investors, engineers, geologists/geophysicists, and land personnel. The dialog is more involved when down-dip or lateral productive limits are unknown.

The confirmation location decision process starts with asset evaluation of the new reservoir discovery. Internal and external factors including but not limited to reservoir characteristics, competitive lease position, unitization issues, SEC reporting requirements, cash flow, product pricing, and others need to be considered in locating the confirmation well. An orderly development plan needs to be formulated. Will the confirmation well be drilled for proved reserves or drilled for reservoir/field definition? What is the expected rate of return and risk of the confirmation location?

No formulas or rules of thumb are available for efficient field development. Each new field development has its own particular issues requiring a combination of various oil field disciplines. Firms following an orderly confirmation and development process are usually rewarded with efficient economic returns and continued confidence from the investment community.

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