Petrobras joins Treasure ventures

Ray Tyson

Petroleum News Houston correspondent

Brazil state-owned oil company Petrobras, through its U.S. subsidiary Petrobras America, has agreed to join Newfield Exploration’s ‘ultra-deep’ Treasure Island and Treasure Bay drilling projects in the relatively shallow waters of the Gulf of Mexico’s continental shelf, Newfield said April 28.

Newfield said Petrobras signed a letter of intent to drill one firm exploration well and has the option to drill a second exploration well to earn a 30 percent interest in all of Newfield’s Treasure Bay leases. Australia’s BHP Billiton serves as operator with a 44 percent working interest and Newfield retains a 26 percent working interest.

Initial drilling to test prospects in the Treasure Bay area is expected in 2005, Newfield said. Newfield and BHP jointly own 60 lease blocks associated with the Treasure Bay project.

Only one company, Shell, is believed to have penetrated the so-called “ultra-deep” zone below 25,000 feet on the Gulf’s continental shelf, at the Shark prospect on South Timbalier. It was a dry hole.

Petrobras also has agreed to participate in the drilling of the Blackbeard West Prospect on Newfield’s Treasure Island leases, consisting of 27 leases east of Treasure Bay. Earlier in April Newfield announced that ExxonMobil, BP and an undisclosed third party, which turned out to be Petrobras, would participate in the Blackbeard prospect. Petrobras’ interest in the project was not disclosed.

Under the terms of the letters of intent, the Treasure Island well must be spud no later than Jan. 31, 2005. The well is being designed to test prospective objectives that range in depth from 27,000 feet to more than 30,000 feet. The prospect covers multiple blocks in the South Timbalier and Ship Shoal regions offshore Louisiana.

The Blackbeard prospect is subject to a 1.25 percent overriding royalty interest held by the Treasure Island Royalty Trust. However, the Treasure Island trust does not hold any interests in the Treasure Bay area, Newfield said.