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Christmas find Knotty and nice
A quartet of partners led by Canadian independent Nexen has opened up what is described as a “new frontier” by drilling to the greatest depth yet in the Gulf of Mexico.
They confirmed growing speculation Dec. 20 by announcing they have found a large oil pool under a thick salt layer after reaching a targeted depth of about 34,200 feet.
The $140 million Knotty Head well, 170 miles southeast of New Orleans, encountered 600 feet of net oil pay in multiple zones after earlier reporting 300 feet of net pay at about 29,500 feet.
Nexen’s U.S. subsidiary is 25 percent operator, with Anadarko Petroleum, Chevron and Australia’s BHP Billiton each holding 25 percent stakes.
Although Nexen says more wells are needed to determine the size of the reservoir, analysts are counting on a 500 million barrel discovery. Appraisal well to be spudded immediately A $35 million appraisal well will be spudded immediately and a third well is planned for 2006.
Production from the well could average 75,000 barrels per day, starting in 2008.
Dan Pickering, president of Houston-based Pickering Energy Partners, said the discovery ranks among the top 15 made in the Gulf and could generate $25 billion in revenues at average oil prices of $50 per barrel.
Weatherford International, which participating in the drilling, said Knotty Head “opens up new opportunities across the globe” by applying new technology it acquired in June from Calgary-based Precision Drilling, including what is described as “hostile-environment-logging,” which applies improved imaging to gather key information during drilling and open up sub-salt plays.
A Nexen spokesman said the partnership now has the added advantage of drilling to new depths in the Gulf.
Nexen has earmarked C$225 million for exploration spending in the Gulf in 2006, scheduling three deepwater shelf and five deepwater wells.
The Gulf breakthrough could also raise Nexen’s profile as a takeover target, given its global interests in Yemen, West Africa, the North Sea and its steady advances in Alberta oil sands and coalbed methane plays.
It is aiming for a 50 percent increase in production over the next two years to 350,000 barrels per day, including a net 85,000 bpd from the North Sea Buzzard field acquired from EnCana.
—Gary Park
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