|
Noble Energy to expand Gulf deepwater program
Ray Tyson Petroleum News Houston Correspondent
Noble Energy says it intends to accelerate exploration and development activity in the deepwater Gulf of Mexico, hoping to carve out a third core area in the region, while pursuing more geologically deep natural gas plays in shallower waters of the Gulf’s continental shelf.
Over the past few years, the Houston-based independent has quietly assembled and evaluated an impressive acreage position in the deepwater Gulf and appears ready to strike on the exploration front.
“We haven’t drilled that many wells over the last few years purposely,” Dick Peneguy, Noble’s offshore manager, said in a May 26 meeting with industry analysts. “We have been generating more prospects than we have drilled. We have now put together a multi-year prospect portfolio.” Discovery in first quarter Actually, Noble began putting its foot to the pedal in the deepwater Gulf during the 2004 first quarter, announcing a discovery at its Ticonderoga prospect and increasing its working interest in two development projects, Lorien and Swordfish.
Noble purchased an additional 50 percent stake in Swordfish, pushing its interest there to 60 percent. The field, located on Viosca Knoll block 917, is expected to come on stream late in the first quarter of 2005, backed with estimated reserves of 20 to 25 million barrels of oil equivalent. Two wells have been drilled thus far and a third is planned for this summer.
Noble bought an additional 40 percent stake in Lorien, increasing its interest there to 60 percent. A 2003 discovery, Lorien is situated on Green Canyon block 199. The partners are currently putting together an appraisal program for the prospect, with the hope of launching production as a tieback in the 2005 fourth quarter. The field contains estimated reserves of 20 to 30 million barrels of oil equivalent. Ticonderoga production planned for 2006 Fifty-fifty Ticonderoga owners Noble and Kerr-McGee are hoping to bring their recent discovery on stream in the third quarter of 2006, Peneguy said, adding that the discovery well logged “well over 230 feet of beautiful oil pay.”
In fact, the only reason Noble gave up operatorship of Ticonderoga to Kerr-McGee is because production would be funneled through Kerr-McGee’s production facilities at nearby Constitution, thus reducing overall development costs at Ticonderoga.
“The trade off was for us is to have accessibility to the spar they are currently preparing,” Peneguy said. He said appraisal work will continue on Ticonderoga this year and that a second development well likely would be drilled in the first quarter of 2005.
On an oil equivalent basis, he said, Noble would receive 11,000 barrels per day in net production from Swordfish, 9,000 barrels per day net from Lorien and 15,000 barrels per day net from Ticonderoga. Deep opportunities maturing Despite working hard to advance the Swordfish, Lorien and Ticonderoga development projects, Noble’s current portfolio of deep opportunities is “maturing and we now need to start expanding,” Peneguy said.
He added: “So we are moving forward with acceleration of our current program and expanding into new areas of the deepwater.”
Three prospects are under consideration for drilling this year, including Sable at Green Canyon block 228, a 10 to 35 million barrel of oil equivalent target Peneguy says “is ready to go.”
Noble owns 100 percent of Sable and is looking to sell down its interest to help spread financial risk, he said, adding that infrastructure in the area would make Sable a candidate for a subsea tieback to an existing platform.
“We have been discussing with a few operators, if we are lucky enough here, where we might go,” Peneguy said. Company now looking for larger targets Noble, which in the past has focused on smaller deepwater reserves of 20 to 50 million barrels to tie back to existing infrastructure, is now actively looking for targets “well over” 50 million barrels, Peneguy said.
“Those opportunities, if successful, will yield standalone opportunities for us,” he said.
In the shallower waters of the Gulf’s continental shelf, Noble is being far more selective than in the past when its offshore acreage domain stretched from the southern tip of Texas to southern Alabama.
The company has not given up on mature and largely depleted shelf plays above 15,000 feet, but is now concentrating on deeper gas plays at 15,000 feet and below.
“We have literally reduced our dependency on the shelf, that is the conventional shelf,” Peneguy noted. “But there are deep opportunities below that. We have selectively high-graded our deep-shelf portfolio.” Deep gas trend the focus Noble is now focusing its exploration efforts on the shelf in the West Cameron-South Marsh Island area, in a deep gas trend just east of Louisiana and south of Mississippi-Alabama.
Because of the company’s existing infrastructure in the area and experience in the play, “we believe Noble has an enviable geological and geophysical competitive advantage as it relates to focusing in this trend,” Peneguy asserted.
He noted that because the 15,000-foot play is not as deep as some, it costs just $4 million per well compared to the roughly $1 million per thousand feet it costs for wells drilled between 17,000 and 30,000 feet.
“We believe there are additional shallow and deep opportunities, yielding significant resources anywhere from 50 to 400 billion cubic feet of gas equivalent per prospect,” Peneguy said.
Despite the shift away from conventional plays on the shelf, the area is still reaping benefits for Noble. The company’s 17-well recompletion program at core properties on Main Pass blocks 305 and 306 is expected to triple current production in the field to 6,900 barrels of oil per day from 2,400 barrels last December.
The company also believes there are “deep opportunities” beneath the Main Pass acreage. Deepwater would provide biggest opportunities However, the numbers show that as far as the offshore Gulf of Mexico goes, it’s the deepwater that would provide Noble with its biggest opportunity for future production. The company noted that while the majority of its acreage on the continental shelf already is developed, more than 90 percent of its deepwater acreage is undeveloped.
Still, of the 42,100 barrels of oil equivalent per day produced by Noble during the 2004 first quarter from the Gulf of Mexico, a hefty 80 percent came from the shelf. “But the deepwater is growing and growing fast,” Peneguy said.
Noble said it increased its 2004 offshore capital budget to $325 million, 70 percent of which is earmarked for deepwater Gulf of Mexico, primarily because of deepwater successes.
“Deepwater has been kind to Noble Energy over the last few years,” Peneguy said. “We believe it to be an attractive play and a play we have a very strong position in. We like deepwater because of the high-impact resources and moderate geologic and mechanical risks.”
He said Noble also likes the deepwater because of the availability of infrastructure that allows discoveries to be tied in to offshore production facilities and pipelines in a timely fashion, “yielding excellent returns on those investments.”
| 