The infrastructure-led exploration (ILX) approach is paying off for oil and gas companies looking for hydrocarbons offshore with shorter cycle times and favorable economics for development.

It is one of the key strategies that California-based Chevron Corp. is using in the U.S. Gulf of Mexico (GoM) as it focuses on new blocks around its existing infrastructure, according to Jay Johnson, executive vice president of the company’s upstream operations.

“We’re looking to push the envelope on how far we can tie back exploration opportunities or discoveries to existing infrastructure and avoid having to build brand new greenfield,” Johnson said on the company’s earnings call last week.

He used the recently announced Esox-1 discovery in the Mississippi Canyon area, where Hess Corp. is the operator and Chevron is a partner, as an example. The two have said they plan to develop the discovery, which hit about 58 m (191 net ft) of high-quality oil-bearing Miocene reservoirs, as a tieback to the Tubular Bells facility.

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“It brings new production in at very low capital cost and with a very short cycle time, so those are the low-cost high return subsea tiebacks that are being enabled and supported by our exploration strategy in the U.S. Gulf of Mexico,” Johnson said.

Companies looking for alternatives to onshore shorter cycle developments like U.S. shale have been rolling out exploration campaigns focused on areas where infrastructure already exists and using seismic data to help find more resources. The result has been a string of discoveries, improved break-evens and quicker time to first oil.

Chevron aims to extend its reach through use of new technology, Johnson said.

“We have used quite successfully the single-phase seafloor pumping at Jack and St. Malo [fields] and really proven that technology,” he said.

The powerful single-phase subsea pumps, with a design pressure of 13,000 pounds per square inch, boost fluids from the wells to the floating host platform between the two fields.

“We’ve now finished the technical certification to move to multiphase pumping,” he added, “and this can really extend that radius of which we can pull production back to existing hosts. …It’s entirely in line with our theme of exploring in prolific basins but also utilizing existing infrastructure and getting more out of our existing facilities whenever possible.”

Chevron was among the industry’s offshore players that spoke about the continuing ILX trend that has dominated the sector, taking place of more expensive and time-consuming megaprojects.

“Our infrastructure-led exploration in the Gulf of Mexico is also proving successful,” Greg Hill, president and COO for Hess Corp. said on the company’s third-quarter earnings call with analysts. “Planning is now underway to tie back to the [Esox-1] well into an existing slot at the Tubular Bells production facility during the first quarter of 2020.”

He said the well was “not your typical tieback in terms of size. This is a significant discovery that’s going to generate very high returns and cash flow, particularly since its tied into that existing slot and will be brought online very quickly.”

Discovery to first oil is expected in only a few months.

The company, working with Kosmos Energy as operator, also plans to spud by year-end the Oldfield prospect, an ILX well about six miles east of Esox-1.

“It’s [GoM] a very important part of the portfolio, strong cash generation. We have outstanding capability there, not only in terms of exploration but also project delivery,” Hill said.

RELATED: US GoM Oil Production Moves Toward Another Record

Hess plans to hold GoM production relatively flat at about 65,000 barrels per day over the next several years. Hill added the company has identified some 25 leads or prospects in the GoM, and a new hub may be needed to keep production flat or grow it.

Meanwhile, Kosmos Energy is drilling the Resolution prospect, another ILX well in the GoM. Believed to hold between 100 million barrels of oil equivalent (MMboe) and 200 MMboe of estimated gross resources, Resolution is the largest prospect in the company’s 2019 drilling campaign.

The last well in the campaign is Oldfield.

“These prospects are potentially much larger and can be transformational for our Gulf of Mexico business. … To use a baseball analogy and apologies to my fellow Astros fans on the line, our ILX portfolio in the GoM offers low-risk singles and doubles, which will replace reserves that we produce during the year,” Kosmos Energy CEO Andrew Inglis said Nov. 4. “We compliment that with larger prospects that can deliver the homerun catalyst if successful.”

Of the three ILX wells drilled this year, two—Nearly Headless Nick and Gladden Deep—have led to discoveries. The Moneypenny prospect was unsuccessful in the GoM, the company said this week.

“Gladden Deep came online within four months of discovery and Nearly Headless Nick is expected online in December, a 15-month development,” Inglis said. “It’s these short development times that result in high returns and quick paybacks for these projects.”

The ILX trend isn’t limited to the GoM.

The Kosmos Energy-operated S-5 ILX well, which Inglis said targeted a part of the Santonian channel not tapped by wells drilled by others offshore Equatorial Guinea, hit oil pay in the underexplored Rio Muni Basin. He said the oil appears to be of higher quality than its Ceiba and Okume discoveries, and the company is working to determine the scale of resources discovered and the best development solution. The find, which came after 3-D seismic data was fast-tracked, is within tieback range to the Ceiba FPSO.

RELATED: Kosmos Energy Finds Oil Offshore Equatorial Guinea

“Work is now also underway to identify additional low-risk tieback prospects around the existing infrastructure,” Inglis said. “Final volumes from the 2018 seismic are expected to be delivered in early 2020 aligned for the maturation of prospects for the next drilling campaign.”

Looking forward, he said future ILX programs could include between three and five ILX wells per year. Four prospects could be drilled next year, he said.

Offshore