Future royalty relief proposals
Royalty relief measures proposed by the US Department of Interior's Minerals Management Service (MMS) inched closer to reality this month. The MMS proposals for the expiring Deep Water Royalty Relief Act were released in mid-September. They were to close for comment on October 16.
"Continued growth in OCS deepwater oil and gas exploration and development is vital for our nation's long-term energy supply," stated MMS Director Walt Rosenbusch. "The continuation of incentives for the deepwater Gulf of Mexico will help support one of our nation's energy policy goals - to increase domestic supplies of natural gas. Further expansion of Gulf (of Mexico) gas production is necessary if we are going to meet the projected demand for 29 tcf of gas in the nation by 2010."
Proposals include providing royalty relief, as needed, for leases issued after November, automatic royalty suspension volumes by selected water depth, and an application process for additional relief if the lessee believes development is unjustified.
Buying up US Gulf real estate
Both Kerr-McGee and Apache went on a spree in the Gulf, purchasing interests in a series of leases and fields.
- Kerr-McGee bought all of Statoil's lease interests in 93 blocks in the deepwater region of the Gulf of Mexico, giving Kerr-McGee interests in 33 new leases and upping current working interests from 33.33% to 66.67% in 60 blocks.
- Apache spent $385 million buying an Occidental Petroleum subsidiary that owns interests on the outer continental shelf in the Gulf of Mexico. Apache now has properties in 32 fields, half of them operated, on 93 blocks with total proved reserves of 56.8 MMboe. Apache said it estimates net production from the Occidental properties through year-end to average 107 MMcf/d of natural gas and 7,800 b/d. The proved reserves have an estimated reserve life of six years.
Oregano, Serrano development plans
Shell E&P's Oregano and Serrano discoveries will be developed via a subsea production system tied back to Shell's Auger tension leg platform (TLP). The Shell's 100%-owned Oregano and Serrano fields, in 3,400 ft water depth in the Gulf of Mexico, are located in Garden Banks 559 and Garden Banks 516, respectively.
Shell said the fields have a combined estimated 100 MMboe recoverable reserves. Reserves at Serrano are primarily gas, while Oregano's reserves are mostly oil. Serrano production is slated to begin in September 2001, with Oregano startup scheduled for December 2001. Peak production rates are expected to reach 150 MMcf/d of gas and 20,000 b/d, respectively.
Atlantis appraisal confirms potential
Results from the Atlantis 2 appraisal well confirm an oil accumulation with over 100 million bbl potential. Atlantis 2, located in the Atwater Foldbelt ultra-deepwater area of the Gulf of Mexico, encountered further oil bearing sands with net pay over 200 ft. The oil zone gives a total net pay of over 500 ft. Participants in the Atlantis 2 well are operator BP with 56% and BHP with 44%.
HI well extends field's limits
The High Island 202 No. A-3 well extended the proven field limits to the south in both the Rob L-3 and Rob L-5 reservoirs. The well was to begin production this month. Operator Spinnaker holds a 75% interest, and Vastar has 25% in the block.
South Timbalier joint venture
Magnum Hunter Resources Inc. and El Paso Production Co. entered a 50/50 joint venture (JV) exploration, development, and recompletion project on South Timbalier 264, South Timbalier 265, and South Timbalier 266. The project includes one producing gas well and three existing wells scheduled for completion. Six to eight additional exploration, development, and recompletion wells were identified. El Paso will operate the drilling phase, and Magnum Hunter will operate the production and related facilities. Each company has 50%, except in the South Timbalier 265 No. A-4 well where El Paso holds 60% and Magnum Hunter holds 40%.
Matagorda 704 wells
Houston Exploration said Matagorda 704 No. 4 and Matagorda 704 No. 5 wells are to begin production in November. A platform is being installed. Operator Houston Exploration has 28% interest. Keyspan Energy, Chieftain, and Enron Oil and Gas hold the remaining interests.
Aker wins riser contract
Aker Maritime will deliver a top tensioned riser system for the Vastar-operated Horn Mountain field in Mississippi Canyon 127, in a water depth of about 5,400 ft. Aker is responsible for the engineering, procurement, fabrication, and delivery of eight top tensioned risers with options for up to six additional risers.
Aker earlier won the contract for the spar hull and mooring system for Horn Mountain. Proposed delivery of the spar is scheduled for second quarter 2002. Vastar holds 66% and Occidental Petroleum Corp. holds 33%. Production is expected to peak at 65,000 b/d and about 60 MMcf/d of gas.
New data contract signed
Bell Geospace Inc. said it signed a contract with Conoco to gather gravity gradiometry data across 2,000 deepwater blocks covering 18,000 square miles in the Gulf of Mexico. The information is to provide supplemental information about geology below the ocean floor and enhance the value of seismic data. The data will be gathered over two years.
Mississippi Canyon survey under way
TGS-NOPEC Geophysical started a non-exclusive 3D pre-stack depth migration project covering about 15,400 sq km in the Mississippi Canyon area of the Gulf of Mexico. The results from the subsurface imaging will complement the firm's original 660-block pre-stack time migrated Miss-issippi Canyon 3D study. Also, the firm contracted with Paradigm Geophysical to perform the depth imaging work. The first phase of this project, covering about 2,700 sq km, is scheduled for delivery before the Central Gulf of Mexico OCS Lease Sale in March 2001.
