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Vol. 11, No. 36 Week of September 03, 2006
Providing coverage of Alaska and northern Canada's oil and gas industry

Blackbeard casts doubt on ultra-deep

Wildcat hits higher than expected pressure, falls short of 32,000-38,000 foot target on Gulf’s OCS

Ray Tyson

For Petroleum News

Blackbeard West No. 1, perhaps the world’s most closely watched exploration well because of its extremely deep target, fell well short of its goal and cast at least some doubt over the future of “ultra-deep” drilling for natural gas on the Gulf of Mexico’s outer continental shelf.

Blackbeard partner Newfield Exploration said drilling on the ExxonMobil-operated wildcat was halted at 30,067 feet, short of its primary targets down to around 32,000 to 38,000 feet. The well was spud in February 2005 and was expected to take a year or longer to drill.

“The well failed to reach its primary targets because of higher than expected pressure,” Newfield said Aug. 16. “The operator is preparing to temporarily abandon the well.”

Well believed to have cost $110 million

Newfield said it invested about $25 million (net) to date in the drilling of the Blackbeard West No. 1 well. The prospect covers multiple blocks in the South Timbalier and Ship Shoal areas offshore Louisiana. The well is believed to have cost around $110 million, which would rank Blackbeard West among the most expensive exploration wells yet drilled in the Gulf of Mexico.

Rowan, which actually drilled Blackbeard using its Tarzan-class Scooter Yeargain jack-up rig, had expected drilling revenues from the Blackbeard contract to range from $28 million to as much as $35 million, depending upon rig time. However, the company also warned that drilling costs could escalate far beyond $35 million should equipment problems develop down hole where pressures and temperatures below 25,000 feet were expected to be extreme. Bottom hole temperatures were expected to range from 400 to 600 degrees.

The Blackbeard West well is on South Timbalier block 168 in 70 feet of water, in an area known as Treasure Island. Newfield said the well encountered only a thin gas bearing sand below 30,000 feet. The Blackbeard West structure was believed to be so large it could easily house 1-to 5 trillion cubic feet of gas reserves.

“Although disappointed that we were unable to test our primary objectives, we have learned a great deal about drilling ultra-deep wells,” said David Trice, Newfield’s chief executive officer. “This has been a challenging well to test a true frontier play.”

Newfield will continue to invest in play

Despite falling short of its goal, Newfield said it was “sufficiently encouraged to continue investing in this play. We intend to use the information gathered from this well to investigate if a well can be designed which will allow us to safely test this prospect in the future.”

Bill Provine, Rowan’s vice president of investor relations, told industry analysts in March 2005 that Blackbeard West operator ExxonMobil wanted to drill four more wells at Treasure Island, even if Blackbeard West came up dry. “Even if the first three wells are dry, they’re still going to drill the fourth well,” he said. Exxon declined to comment on Provine’s statement.

However, Newfield’s Trice said in May 2005 that Newfield was discussing with third parties the possibility of drilling more “ultra-deep” wildcat wells on prospects located near Blackbeard West, including Blackbeard East. Trice did not name the parties involved in the discussions. However, his comments at least partially confirmed Provine’s comments related to Exxon and future wells.

Industry waiting on sidelines

Trice also said in May 2005 that companies interested in participating in future ultra-deep drilling on the Gulf’s continental shelf were waiting on the sidelines until drilling results from Blackbeard West were released.

“The industry basically is like a bunch of birds on a wire watching the Blackbeard well go down,” Trice said. “I think people want to see how long does it take, how much does it cost, and did you find anything.”

Australia’s BHP Billiton, another Newfield partner, also was said to be committed to drill an ultra-deep well on a nearby Treasure Bay lease.

Shell is believed to be the first major oil company to drill below 25,000 feet on the Gulf’s continental shelf, an arbitrary line that separates deep from the ultra-deep. The Shark well, drilled to a depth of around 26,000 feet, turned out to be a dry hole. Several other ultra-deep exploratory wells have been drilled on the shelf with mixed results, but none to the extreme depths initially planned for Blackbeard West.

Newfield holds a 23 percent interest in the Blackbeard West well. ExxonMobil has a 25 percent stake in the well, followed by BP with a 20 percent stake, Petrobras America with a 20 percent interest, Dominion Exploration & Production with a 7 percent interest and BHP Billiton Petroleum (Deepwater) Inc. with a 5 percent interest. The Blackbeard West Prospect is subject to a 1.25 percent overriding royalty interest held by the Treasure Island Royalty Trust.



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