Sidetracks confirm huge oil column

Petroleum News

Preliminary results from a pair of sidetracks are said to have confirmed the rich hydrocarbon column encountered by the high-profile Neptune-5 exploratory well in deepwater Gulf of Mexico.

However, it now appears that another well would be required to establish the reservoir's actual size before the owners are prepared to declare Neptune commercial or move ahead with a development plan.

Neptune partner Woodside Petroleum announced Sept. 11 that one of the sidetracks had extended by 100 feet the gross 1,200-foot hydrocarbon column down dip of the original well, and the other had encountered another 120 feet of net oil column up structure. The Neptune-5 well, located on Atwater Valley Block 574, found more than 500 feet of net oil pay.

Sidetrack 1 also found “good reservoir quality sands” while Sidetrack 2 recovered oil “of similar quality to the oil encountered in the original Neptune-5 well,” Woodside said.

A spokesman for Neptune operator BHP Billiton tended to play down the latest well results, saying that while “these are positive results ... it's going to take a lot of analysis” before the partners decide whether they have a commercial project.

“But this new data certainly will help out in determining commerciality and particular development options,” he added. “This sidetracks certainly confirm what we announced in August.”

Crude similar to Atlantis and Mad Dog

Nearby Atlantis and Mad Dog, currently under development, are thought to hold combined reserves of 800 million to 1 billion barrels of oil equivalent. Before Neptune-5 came along, the commercial prospects for the field were considered marginal at an estimated 100 million to 200 million barrels of oil equivalent reserves.

A week before Woodside announced Neptune's latest results, Clarence Cazalot, chief executive officer of Neptune partner Marathon Oil, said at an analysts' meeting in New York that “I believe we probably have a commercial project, a commercial development as it exists today.”

But he said another well probably would be drilled at Neptune “to establish reserves” and further help the partners in “the commercial development planning of this project.”

Woodside said operations were under way to temporarily abandon Neptune-5 and its sidetracks l as a potential producer in the event Neptune is shown to be commercially viable. “The results of the three wells have been very encouraging and will be integrated with field development studies,” the company added.

Located in roughly 6,200 feet of water 135 miles from the Louisiana coast, Neptune initially was discovered in 1995. Additional exploratory drilling on the five-block prospect turned up a range of pay dirt in columns far less robust than what the Neptune-5 well encountered. Neptune-5 was drilled to a total depth of 19,142 feet, including the water column.

BHP holds a 35 percent stake in Neptune. Marathon has a 30 percent interest, Woodside a 20 percent interest and Repsol YPF subsidiary Maxus Exploration, a 15 percent interest. BHP also holds a 44 percent interest in Atlantis and a 23.9 percent stake in Mad Dog, and operates the Shenzi discovery just northwest of Atlantis.

BP drilling Puma; BHP ready to spud Shenzi

North of Atlantis at the Shenzi prospect BHP is due to spud an appraisal well in the next few days, Cassidy said, using Global Santa Fe’s C.R. Luigs drillship, which was most recently used to drill the Neptune-5 well.

Mike Weill, head of BHP’s petroleum operations and technology for the Americas and Australia, said Sept. 17 at the RBC Capital Markets conference in Houston, Texas, that the company will spend $162 million of its $250 million worldwide exploration budget in the Gulf of Mexico.

Cassidy confirmed a press report that quoted Weill as saying BHP expects to drill four to five wildcat wells per year in the Gulf.

“The lion’s share of our exploration budget is going to the Gulf of Mexico. It was the same last year,” Cassidy said.