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Unocal cuts Gulf shelf exploration Alaska has lowest replacement cost, company replaces 149% of production Allen Baker Petroleum News Contributing Writer
Unocal Corp. has cut its exploration program for the Gulf of Mexico shelf by about 50 percent for the current year after disappointing results from that area in 2003. Overall, Unocal replaced 149 percent of its 2003 production with new reserves, though asset sales led to a decline in the overall reserve base.
The move in the Gulf came after drilling cost overruns and lower than expected discovery volumes pushed well beyond the company’s goal of spending $8 or less per barrel of oil equivalent reserves in finding, development and acquisition costs. FD & A costs for the Gulf shelf were just under $42 per barrel.
In North America, the Alaska, Pure Resources and Northrock programs met or exceeded the $8 goal, the company said Feb. 2, but Gulf costs drove the overall cost of a barrel of new reserves in North America to $9.88 per barrel. That figure doesn’t include the company’s deep water drilling program, where costs were running $32.43 a barrel. International FD & A costs at less than $5 per barrel For Unocal’s international operations, finding, development and acquisition costs came in at less than $5 per barrel. Unocal, based in El Segundo, Calif., booked new reserves in Bangladesh and offshore Indonesia as reserves outside North America grew by a hundred million BOE to 1,182 million BOE, two thirds of the company’s total.
In Alaska, the company added 9 million equivalent barrels to its reserves, at an FD&A cost of $4.71 a barrel, best of any company segment. Six million BOE came from discoveries and extensions, while about 3 million came from revisions and purchases. Alaska reserves still declined from 104 million BOE to 101 million as the company produced 13 million BOE in the state during 2003.
The company booked 7 million barrels of oil equivalent for the Mad Dog and K2 projects in the deepwater Gulf. Mad Dog startup is expected next year.
Unocal added 203 million barrels of oil equivalent to its reserves through discoveries and extensions out of total additions of 258 million BOE, while producing 169 million BOE. Worldwide reserves at the end of 2003 were estimated at 1,765 million BOE, down from 1,774 million a year earlier due to sales of 98 million barrels of oil equivalent reserves.
Unocal says it’s cautious in evaluating projects to avoid overstating prospects. Last year, more than 75 percent of Unocal’s reserves were evaluated by auditing teams that include an independent engineering firm.
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