Knotty Head discovery well looking good

Gulf of Mexico exploration well has already found more than 300 feet of apparent pay; headed to 32,500 feet in search of more

Ray Tyson

Petroleum News Houston Correspondent

Knotty Head could turn out to be a much larger Gulf of Mexico discovery than disclosed June 30 by co-operators Unocal and Nexen.

The partners said the Knotty Head exploration well, so far drilled to a depth of 29,670 feet, had encountered more than 300 feet of “apparent hydrocarbon pay,” already a tidy discovery by U.S. Gulf deepwater standards.

But the 300 feet of apparent pay was found in a “secondary objective,” Knotty Head prospect operator Nexen said, adding that the “primary objective” yet to be penetrated was farther downhole in the Lower Miocene section.

Unocal, which is operating the initial Knotty Head exploration well on Green Canyon Block 512, said it had another 2,800 feet of drilling before reaching a planned well depth of 32,500 feet.

Nexen and Unocal, along with fellow exploration and production independents BHP Billiton and Anadarko Petroleum, each hold a 25 percent interest in the Knotty Head prospect.

Chilkoot non-commercial

Unocal and partner Kerr-McGee separately reported a “non-commercial” exploration well at their deepwater Chilkoot prospect on Green Canyon Block 320. Unocal said it expected to record a $6 million pre-tax charge in the 2005 second quarter to cover its share of the well costs.

The well, drilled to a depth of 32,023 feet, is being temporarily abandoned but will be considered for future re-entry or sidetrack, Chilkoot operator Kerr-McGee said June 30, noting that Chilkoot set a well depth record for the company and is the deepest penetration thus far in western Green Canyon area.

“Well data is being evaluated and upon completion, additional appraisal will be considered,” Kerr-McGee added. “Data obtained is important to the geological understanding in this under-explored area where Kerr-McGee holds interests in approximately 35 blocks.”

Kerr-McGee holds a 33.33 percent interest in Chilkoot, followed by Unocal with a 23.34 percent interest, Devon Louisiana with a 20 percent interest, Plains Exploration & Production with a 13.33 percent interest, and Dominion Exploration & Production with a 10 percent interest.

Rig will move to Conquest

Kerr-McGee operates Conquest and West Covington with 50 percent working interests. The prospects have estimated reserve potential of 90 million to 240 million barrels of oil equivalent “and could add significant value in the Constitution area,” the company said. The Constitution hub, which includes the development of Ticonderoga through a sub-sea tieback, is Kerr- McGee’s sixth-operated deepwater hub in the U.S. Gulf. First production is expected in mid-2006.

East Breaks estimated at 10-20 million barrels

The East Breaks Block 599 discovery, located in 3,220 feet of water, is operated by Kerr-McGee with a 33.34 percent interest. Kerr-McGee’s partners are Amerada Hess and Marubeni Oil & Gas, each with a 33.33 percent interest.

The East Breaks 599 well, spud on May 27, was drilled to a total measured depth of 9,142 feet and encountered more than 135 net feet of “high-quality” oil pay in several sands, Kerr-McGee said, adding that the well would be temporarily abandoned for completion in early 2006.

Dave Hager, Kerr-McGee’ senior vice president of exploration and production, said the company plans additional satellite exploration in the East Breaks area, with a four-well exploratory program at Northwest Nansen near the company’s Nansen production hub.

“We expect to spud the first well later this summer and estimate that the combined resource potential for the four fault blocks is in the range of 20 million to 50 million barrels of oil equivalent,” Hager said.