Six companies have pooled their resources to drill a rare and no doubt expensive “ultra-deep” exploration well in the relatively shallow waters of the Gulf of Mexico’s continental shelf, according to Noble Energy, a 20 percent partner in the venture on Viosca Knoll Block 251.
The so-called Cadillac wildcat is said to have passed the 17,000 foot level headed to touch down at 25,000 feet, generally considered to be the depth at which deep becomes ultra-deep on the continental shelf.
Noble would not speculate as to how long it might take to complete the well, but did say Cadillac is considered to be a “high risk, high reward” play.
“It’s a little more complex and hostile when you get down there,” Noble spokesman Greg Panagos said.
Only a few companies have ventured into the ultra-deep zone. Earlier in February a consortium led by operator ExxonMobil spud a well on the Blackbeard prospect at South Timbalier Block 168. The well is permitted to 32,000 feet and could take up to a year to drill.
Cadillac prospect massive
The Cadillac prospect is massive, covering eight to 10 blocks on the shelf, and could hold “several hundred billion cubic feet” of natural gas reserves, Chuck Davidson, Noble’s chief executive officer, said in a Feb. 22 conference call with industry analysts.
“This is a very large prospect,” he said, adding that Cadillac operator ChevronTexaco is targeting the Cotton Valley trend, a play that has produced significant discoveries onshore.
ChevronTexaco holds a 30 percent interest in Cadillac. Noble and Kerr-McGee each hold a 20 percent interest, while Devon Energy, Newfield Exploration and Cabot Oil & Gas each hold a 10 percent stake.
“This is going to be a drill and test … with substantial completion costs,” Davidson said. “But it is a very significant prospect for the traditional shelf and has a very unique horizon.”
Actually, the Cadillac prospect dates back to 1997 when partners ChevronTexaco and Noble drilled an unsuccessful exploration well to the upper reach of the Cotton Valley trend. The project was abandoned when the well encountered mechanical problems, but Davidson said both companies were encouraged by what they saw.
Since 1997, ChevronTexaco and Noble have done additional technical work on the prospect and gained the necessary confidence to drill and complete a well, Davidson said, adding that “it was really the geologic technical work that brought this prospect forward again.”
Well cost could exceed $30 million
Noble retained its 20 percent interest in the prospect, while ChevronTexaco brought in partners Kerr-McGee, Devon, Cabot and Newfield to share expenses. An ultra-deep exploration well on the shelf, depending on obstacles encountered along the way, can easily run more than $30 million.
Cadillac partner Newfield also holds a 23 percent overriding interest in the ExxonMobil-operated Blackbeard prospect, located on Newfield’s multi-block Treasure Island play. BP and Brazil’s Petrobras also hold a stake in Blackbeard.
Shell is believed to be the first company to drill an ultra-deep exploration well on the Gulf’s continental shelf, but its Shark wildcat turned out to be a dry hole. The major also participated in a 26,000-foot well on the Joseph prospect offshore East Texas.
Meanwhile, Noble Energy said it plans to drill or participate in at least 352 U.S. onshore exploration and development wells this year, more than tripling last year’s 111- well performance.
“I would say that activity will pale in comparison to what we expect and have already begun in 2005,” Davidson said.
Noble, riding high on an unprecedented run up in natural gas prices, actually began accelerating its U.S. onshore drilling program last year, which contributed to an overall 16 percent production increase in the 2004 fourth quarter vs. the same period in 2003.
“Without question 2004 was a very important year for Noble Energy,” Davidson said, noting that the company’s fourth-quarter earnings soared to a record $329 million on strong worldwide production.
In particular, Noble is picking up the pace in the U.S. Rockies and Mid-continent, where the company plans to drill around 300 wells in 2005 compared to 77 in 2004. Most of the increase will come at the company’s Niobrara play in western Colorado where 225 wells are planned in 2005 versus just 25 last year.
