The Gunnison deepwater development project in the Gulf of Mexico remains on budget and on schedule, Nexen said. The truss spar production hull is complete and Nexen has transported it from the construction facility in Finland to a staging area in Texas. Mooring operations, installation of the production topside, and pipeline tie-ins will be completed during 3Q and 4Q 2003.
Production from the field is scheduled to begin in early 2004 at 30 MMcfd of natural gas and 2,000 b/d of oil, net to Nexen, increasing to 50 MMcfd of gas and 9,000 b/d late in the year. The current development plan will fill 75% of the design capacity of the facility, leaving room for growth from exploration and the processing of third-party volumes.
In May, Nexen entered an agreement with Shell Exploration and Production Co. to jointly explore a 1,116 sq mi area of the deepwater eastern Gulf of Mexico. The area of mutual interest consists of 124 blocks in Mississippi Canyon and Desoto Canyon. Under the terms of the participation agreement, Nexen is earning a 20% interest in the Shiloh prospect, which is drilling on Desoto Canyon block 269 in 7,500 ft of water.
The agreement also provides the option to participate in other exploration opportunities within the joint venture area.
This is Nexen's second exploration venture with Shell Exploration. In 2002 the company entered into an agreement to jointly explore a 1,044-sq mi area in the shallow water of the Gulf of Mexico for natural gas in deep Miocene age reservoirs. The second well will test the Shark prospect on South Timbalier 174. It is expected to spud during 3Q.
Elsewhere in the Gulf of Mexico, Nexen expects to begin drilling a third development well at Aspen in 4Q. With success, this will be followed by an exploration well at Crested Butte, a direct offset to Aspen. An exploratory test of the Gotcha prospect, on Alaminos Canyon block 856, adjacent to Shell's Great White discovery, is expected to begin drilling late in 4Q 2003 or early in 2004.