Target 25,000 feet: BP plans expensive gulf well

BP aims to be first company to drill ultra-deep well on continental shelf

Petroleum News Houston Staff

BP Exploration & Production could become the first to drill an offshore wildcat into an untested and extremely deep geological target situated some 25,000 feet beneath the Gulf of Mexico’s continental shelf.

Joint venture partner Newfield Exploration, a Houston-based exploration and production independent, said June 2 it received a notice from operator BP that it intends to drill a well to test the so-called “Treasure Island exploration concept.”

BP said it plans to drill the well this fall.

Treasure Island covers various horizons below specified depths on 116 blocks in the relatively shallow waters of the shelf offshore Louisiana.

It specifically refers to “ultra-deep horizons” located below a salt weld typically found at 18,000 feet but often as deep as 22,200 feet, Newfield said. Treasure Island acreage is spread across South Timbalier, Ship Shoal and Eugene Island.

“There is no production and there are no proved reserves currently associated with Treasure Island and no wells have yet been drilled to test the exploration concept,” the company added.

“As a result, ultimate commercialization of any one or more of the currently identified prospects may never be realized because the prospects are never tested, because oil or gas is not discovered or, if discovered, because the costs of development may make commercialization uneconomic.”

Costs could exceed $30 million per well

However, BP is caught between a rock and a hard place. Under terms of their Treasure Island agreement, BP would have to assign 20 leases to Newfield should BP fail to begin drilling an ultra-deep well by Jan. 1, 2004. BP would absorb the entire cost of the initial well, Newfield said.

Newfield actually inherited its Treasure Island position from independent EEX, which it acquired last year. Under terms of the original agreement, BP acquired a 75 percent interest in EEX blocks, promising to do additional leasing and geophysical activities. EEX’ 25 percent interest was carried by BP, meaning BP would cover all initial exploration costs.

Because of the extreme pressures and temperatures at depths below 25,000 feet, there likely would be more gas than oil, geologists believe. The sedimentary sand systems that make up the play across the shelf are said to be so immense they rival California in size.

Other companies, including independent Pioneer Natural Resources, have expressed interest in ultra-deep plays on the continental shelf, but so far no one has taken the plunge.

One problem relates to the relatively short, five-year term limits for federal leases located on the continental shelf. The U.S. Minerals Management Service says companies want to extend terms to seven years, to give them more time to properly evaluate leases for ultra-deep drilling and to arrange for rigs and equipment. MMS says it is considering the request.