Gulf of Mexico

Total Offshore Production Systems (TOPS) said it brought onstream Reading & Bates Development's 15,000 psi Gyrfalcon well, producing at 13 MMcf/d and 500 b/d of condensate. Gyrfalcon is located in 880 ft water depth on Green Canyon 20.

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First 15,000 psi wellhead in use

Total Offshore Production Systems (TOPS) said it brought onstream Reading & Bates Development's 15,000 psi Gyrfalcon well, producing at 13 MMcf/d and 500 b/d of condensate. Gyrfalcon is located in 880 ft water depth on Green Canyon 20. The well is tied back to Shell's Boxer platform, located three miles away on Green Canyon 19, in 750 ft water depth.

TOPS completed the record pressure project under a single contract, using the services of five suppliers: Intec Engineering, Cal Dive Inter-national, Cameron, Kvárner, and Sonsub. The fixed cost of the contract was $18 million. TOPS undertook schedule, weather, and integration risk associated with the system. The company used an adaptation of a 10,000 psi Cameron design to create the 15,000 psi wellhead.

MMS issues final proposed rules

The US Minerals Management Service (MMS) published a final rule intended to clarify and update regulations for OCS post-lease operations. The regulations will provide for regular safety reviews for operators and penalties for poor safety performers - including revocation of operatorship for worst performers. It will also create uniformity to the public release time for proprietary data gathered under pre-lease permits; allow the MMS to grant a right-of-use and easement on the OCS for a state lessee; and clarify the difference between granting and directing a suspension.

The MMS also published a supplementary proposed rule for valuing oil produced on federal lands. It held workshops in Houston, Albuquerque, and Washington DC on the rule. The American Petroleum Institute (API) said the rule appears to eliminate some uncertainty that currently plagues the royalty system, but the institute said it was disappointed the rule still calls for the use of spot market prices to indicate value for production.

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API also said the industry disagrees strongly with the agency's insistence that the lessee has a duty to market production free of charge to the government. "Given the inherent complexity of any valuation approach, this ongoing disagreement on oil valuation highlights the need to seriously consider developing a royalty-in-kind (RIK) system," the statement related. "The RIK experiment underway in the natural gas pilot program in the Gulf of Mexico is promising. Such a system remains the least-complicated method for industry to pay and the government to collect its fair share of production."

Nansen extended, reserves increased

Kerr-McGee said it expanded the Nansen Prospect, located in East Breaks 601, 602, and 646, with another appraisal well. East Breaks 602 No. 3 well, located in 3,680 ft of water, was drilled to 14,050 ft and found 240 ft of net oil and gas pay, mostly oil.

The previous two Nansen wells were primarily gas. Reserves in the area are now estimated at 500-600 Bcf. Previously, the estimate was 350-450 Bcf. Another appraisal well, East Breaks 602 No. 4, will be spudded 11,500 ft northeast of No. 1 well in the first quarter to test the downdip limit in the original discovery fault block and additional deeper potential.

A plan for development of Nansen should be complete in the first quarter with first production in 2002. Kerr-McGee also announced another successful appraisal well, East Breaks 643 No. 3.

This North Boomvang prospect well, located in 3,449 ft water depth, was drilled to 11,591 ft and found 165 ft of net oil and gas pay. Boomvang development scenarios are being evaluated. Kerr-McGee operates Nansen with 50% interest (Ocean Energy holds the other half) and Boomvang with 30%. Boomvang partners are Reading & Bates Development, 50%, and Ocean Energy, 20%.

MMS releases 1998 production, royalty stats

The US Minerals Management Service said that in 1998 it collected $4.3 billion from outer continental shelf properties, down $936.6 million from 1997. It attributed the decline to lower oil and gas prices and a reduction in revenues collected from offshore oil and gas competitive lease sales. Oil sales volume from the OCS fell 0.4% - from 478.8 million bbl in 1997 to 476.7 million bbl in 1998. A 17.6 million bbl decline on the California OCS (from Point Arguello and Santa Ynez) was partially offset by a 15.5 million bbl increase in the Gulf of Mexico. Also, OCS oil royalties fell to $908.5 million in 1998 from $1.3 billion in 1997. OCS gas sales volume fell from 5.1 tcf in 1997 to 4.8 tcf in 1998. Gas royalties fell from $2.1 billion in 1997 to $1.8 billion in 1998.

Alaminos Canyon first target for new EVA-4000

Alaminos Canyon 627 in the Gulf of Mexico is the target area for the first well by Noble Drilling's fifth converted semisubmersible EVA-4000 design rig. The well located in 5,220 ft of water, will be drilled for Amerada Hess. The Noble Max Smith went through final commissioning in early January.

McMoRan will explore Texaco tracts

McMoRan Exploration and Texaco signed an agreement allowing McMoRan to explore all or parts of 90 Texaco tracts in the Gulf of Mexico. The tracts cover 391,349 acres ranging between 10 ft water depth out to 2,600 ft. McMoRan will commit more than $100 million for exploration drilling over the next four years.

McMoRan will be the operator of the wells, and may earn interest in the exploration tracts. Texaco will retain the right to earn interest in the exploration tracts. McMoRan co-chairman James R. Moffett stated that the "partnership will be the foundation of an aggressive exploration program combining Texaco's leasehold inventory and McMoRan's exploration expertise. Texaco and McMoRan will benefit from sharing expertise in one of the largest active exploration positions in the OCS."

GOM Pipelines Change Hands

El Paso Energy said it has arranged to divest three pipeline systems, as required for the Federal Trade Commission to approve its merger with Sonat. Two of these pipelines are located offshore. CMS Energy subsidiary CMS Trunkline Gas agreed to purchase Sea Robin Pipeline for $72 million plus a transition service agreement. Sea Robin is a 1 Bcf/d, 445-mile natural gas and condensate pipeline off Louisiana. An unnamed party has arranged to purchase the 1 bcf/d Destin pipeline system located in the Eastern Gulf of Mexico for $160 million. This arrangement is subject to the first right of refusal by El Paso Energy's partners in the venture.

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