Sequoia dry hole casts doubt on Unocal’s Mirage prospect

Ray Tyson

Unocal said its Sequoia exploration well, designed to test the deeper intervals of the company’s 1999 Mirage discovery in the Gulf of Mexico came up dry and that means the prospect is likely not commercial.

“The development of the Mirage discovery is now unlikely given the results of the Sequoia well,” Unocal said Dec. 15.

Located on Mississippi Canyon block 941, Sequoia was drilled to a total depth of 29,100 feet. The Mirage drilling program included an initial well drilled to 16,600 feet and a sidetrack that reached a depth of 22,400 feet.

“Unocal had hoped that a successful test of the deeper intervals with the Sequoia well would lead to development, but the hydrocarbons encountered in the deeper interval were deemed to be noncommercial,” the company said.

Unocal said it expects to take a $29 million pre-tax write-down in the 2004 fourth quarter to cover its share of costs associated with the Sequoia well and the earlier Mirage exploration well.

Unocal estimated that its total fourth quarter dry hole expense will be between $75 million and $85 million versus $50 million to $75 million announced in October.

Unocal operated the well. Other working interest holders include Total E&P USA, Marathon Oil and Spinnaker Exploration.