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Rig added for ultra-deep Blackbeard McMoRan commits $160 million for Rowan jack-up for Gulf of Mexico prospects; move could signal positive Blackbeard log results Ray Tyson For Petroleum News
Exploration and production independent McMoRan Oil & Gas Corp. has committed $160 million for another Rowan jack-up rig to drill one or more “ultra-deep” gas wells on the Gulf of Mexico’s continental shelf, including additional drilling on the challenging Blackbeard prospect.
The move could signal positive results from a recent 600-foot open-hole log taken from the Blackbeard No. 1 wildcat, which was abandoned by previous operator ExxonMobil and its partners in August 2006 and then re-entered in March 2008 by the new operator, McMoRan, and its partners.
Blackbeard was once among the most closely observed exploration wells on the globe because of its extreme target depth down to as much as 38,000 feet, which might have established a world drilling record measured from the ocean floor. Moreover, success might have opened a huge new gas play on the shelf. In fact, analysts generally believe a major discovery farther down could dramatically alter the production dynamics of the shelf, which has been in decline for years.
However, Exxon gave up on Blackbeard at around 30,000 feet due, in part, to the rig’s inability to handle extreme pressures downhole.
McMoRan acquired rights The rights to the Blackbeard prospect, located on South Timbalier Block 168 in 70 feet of water, were acquired by McMoRan from another E&P independent, Newfield Exploration in August 2007, as part of a $1.1 billion property acquisition package situated in the relatively shallow waters of the U.S. Gulf’s continental shelf. The Blackbeard prospect is actually part of a much larger ultra-deep play called Treasure Island.
McMoRan, looking to test Exxon’s original target, contracted a beefed up Rowan Gorilla IV jack-up rig to re-enter and deepen the Blackbeard No. 1 well. The depth was increased to 32,500 feet where drilling was evidently suspended while McMoRan awaited log results. The well is permitted to 35,000 feet.
“Based on the information we get from the log, it will give us then the basis for reaching a decision about drilling deeper, about other drilling to test the sands that we’ve seen,” McMoRan co-chairman Richard C. Adkerson told industry analysts Aug. 14 at the Oil & Gas Conference in Denver, Colo.
He also told analysts at the conference, “we have seen indications of productive sands as we have been drilling at shallower depths.”
Contract for ultra-deep wells Two and a half weeks later Rowan announced it had entered into another drilling contract with McMoRan, for Rowan’s new 240C class jack-up, Rowan-Mississippi. “The rig will drill one or more ultra-deep gas wells in the Gulf of Mexico, including additional drilling on the Blackbeard prospect,” the company noted.
The contract is for a two-year term and will provide Rowan with about $160 million of drilling revenues. McMoRan’s partners in the drilling program include Plains Exploration & Production Inc. and Energy XXI. Rowan said the Gorilla IV remained onsite at the Blackbeard prospect.
The Rowan-Mississippi is currently at the Rowan’s Sabine Pass, Texas, facility for final outfitting. The rig is scheduled for christening on Nov. 1, 2008, and Rowan said it should commence operations for McMoRan immediately.
“We have seen the Gulf of Mexico drilling market strengthen in recent months, and we are especially encouraged by interest in the ultra-deep gas play,” said Danny McNease, Rowan’s chairman and chief executive officer.
The original Blackbeard exploration well took a year and a half to drill and was said to have cost up to a staggering $200 million, certainly ranking it among the most expensive wells drilled anywhere in the U.S. Gulf. In fact, the Blackbeard well cost more than McMoRan’s initial 2008 capital expenditure budget.
“Based on our experience in drilling high-pressure Miocene wells in the shallower waters of the Gulf, our team felt confident that we could re-enter this well and test the geology that was established prior to drilling the original well,” Adkerson said.
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