Gulf of Mexico

"By partnering with BP in this area, we can leverage our subsalt, shallow water expertise with BP's deepwater experience to provide a greater range of drilling discovery opportunities for both companies," explained Anadarko COO John Seitz. Under the JV deal, BP will assign Anadarko its rights in eight blocks near Anadarko's Marco Polo discovery at Green Canyon 608, which Anadarko is working to develop. BP holds 100% of the 95 blocks in the South Auger deal. Under the JV, Anadarko will have the option to earn 33-66% working interest in the blocks. The rest of the 640 blocks in the area have either been leased by other companies or are unleased.

Pioneer buys into Aconcagua

Pioneer Natural Resources Co. will buy half of Mariner Energy's interest in the Aconcagua field and the Canyon Express pipeline project for $25.5 million. Pioneer is purchasing an additional 12.5% working interest in the Aconcagua field in Mississippi Canyon 305 to bring its total interest in the field to 37.5%. Pioneer is also purchasing an additional interest of around 5.6% in the Canyon Express pipeline project, to increase Pioneer's interest to 23.5%. Aconcagua is one of three Gulf of Mexico deepwater natural gas fields being jointly developed as part of the Canyon Express pipeline project. Scheduled to begin production in mid-2002, it will have the capacity to deliver 500 MMcf/d.

Polishing 'big oil's' image

GlobalSantaFe Chairman Bob Rose urged the oil and gas industry to set the record straight with the public. During a recent oilfield breakfast in Houston, Rose said the public has some very incorrect images of the oil industry that will only be expunged with the efforts of those in the industry. Most people tend to think the industry is full of country bumpkins bent on damaging the environment while making a pretty penny.

"If we're price gougers, we're not very good at it," he said. In fact, in a world where pharmaceutical companies make an average 18.7% profit margin, the oil and gas industry ranks pretty low, with its 8.1% profit margin, he said. "We need to mobilize as an industry to improve our public image," Rose said.

Falcon gets go-ahead

Pioneer Natural Resour-ces and Mariner Energy will develop the Falcon deepwater field in the Gulf of Mexico. Gas production is scheduled for early 2003 with peak rates expected to reach 175 MMcf/d of equivalent. Gas reserves estimates range from 175-240 bcf. Pioneer has a 45% working interest in the field, and operator Mariner has a 50% working interest.

Falcon is 100 miles east of Corpus Christi, in 3,400 ft water depths in East Breaks 579/623. The field will be produced via a two-well subsea development tied back to a host platform on the shelf about 30 miles away. The system will be expandable to accommodate subsea tiebacks from other prospects owned by Pioneer and Mariner in the surrounding area.

El Paso wins Medusa contract

The Medusa field partners awarded El Paso Energy Partners subsidiary VK Deepwater Gathering Co. a contract to install a natural gas pipeline from South Pass 55 to the Medusa field in Mississippi Canyon 582 in the Gulf of Mexico. The new pipeline will extend from the terminus of El Paso Energy Partners' Viosca Knoll Gathering System to Medusa, in 2,200 ft water depths. Field partners are Murphy, Callon Petroleum, and Agip's British-Borneo Deepwater. Construction of the pipeline is scheduled to begin in early 2002, with first production from the Medusa development anticipated in 4Q 2002.

Project sanctions

Three prospects are expected to be sanctioned shortly, following good drilling results:

• BHP Billiton said its Atlantis-3 sidetrack well in the Gulf of Mexico encountered hydrocarbon reservoirs. The BP-operated Glomar Explorer drilled the Green Canyon 743 well in 6,612 ft water depths. The field, with estimated reserves at 400-800 million BOE, could receive project sanction in the first half of 2002. Operator BP owns 56% and BHP holds 44%.
• The Discoverer Spirit drilled the Mad Dog-4 appraisal well in Green Canyon 782 in 4,430 ft water depth and encountered hydrocarbon-bearing sands. Reserves are estimated at 200- 450 million BOE, and project sanction was expected around the end of 2001. The operator, BP, owns 60.5%, BHP holds 23.9%, and Unocal holds 15.6%.
• BHP's Boris exploration well in Green Canyon 282 found hydrocarbon-bearing sands after being drilled by Ocean Quest in 2,386 ft water depths. It will be evaluated for development via a tieback to the Typhoon production facility five miles away. Operator BHP owns 50% and Chevron and Samedan each hold 25%.

Conoco, AEC ink JV deal

Conoco entered an exploration joint venture (JV) agreement with Alberta Energy Co.'s AEC Gulf of Mexico. Under the agreement, the two will participate in four exploration wells in 26 exploratory leases that Conoco holds. AEC also has the right to participate in six potential wells in 35 of Conoco's other exploratory leases. The agreement follows a similar deal with Norsk Hydro's Americas unit. The two JV agreements overlap on several prospect areas, Conoco said. Conoco will remain operator of all prospects it currently operates, and it will retain working interests ranging from 25% to 60% in all prospects in the agreements. AEC and Norsk Hydro will provide funding that Conoco will use to offset its portion of the well cost.

"Our strategy upon entering the deepwater Gulf of Mexico in 1996 was to acquire large prospective acreage positions at high working interest levels and bring in partners with terms deemed favorable to Conoco," said Gary Merriman, Conoco's president for exploration production for the US and South America.

In a separate deal, Conoco sold some of its oil and gas properties in the Gulf of Mexico to Stone Energy in a $300 million deal, effective at the close of the year. Conoco said the sales would not affect its deepwater exploration and production program in the Gulf. Conoco is using proceeds of the sale to repay debt.