October 21, 2008 at 7:28 pm #3366
<Ouch, too bad Exxon – looks like McMoRan made BIG (possibly 2-4 billion barrels) discovery on XOM’s abandoned USGC oil field – Blackbeard. ExxonMobil was never able to drill below 32,000 feet but McMoRan has already passed 33,000 and may be going for 35,000 feet. It has already determined Blackbeard is a massive find that may surpass APC K2 and BP’s Thunder horse Gulf finds. – CERandall>
Exxon Reject May Be Biggest U.S. Oil Find in Decade (Update1)
By Joe Carroll
Oct. 20, 2008 (Bloomberg) — A Gulf of Mexico oil field abandoned
by Exxon Mobil Corp. two years ago as no longer worth drilling
may turn out to be the biggest U.S. discovery in a decade.
The South Timbalier 168 project off the coast of Louisiana
may hold “several billion barrels of oil,” rather than the 500
million previously estimated, said James “Jim Bob” Moffett,
co-chairman of McMoRan Exploration Co., which is leading a
drilling effort at the field.
The prospect, formerly known as Blackbeard, may surpass
Anadarko Petroleum Corp.’s K2 field, which holds an estimated 2
billion to 4 billion barrels, and BP Plc’s 1.5 billion-barrel
Thunder Horse, the largest Gulf discoveries. New Orleans-based
McMoRan and partners Plains Exploration & Production Co. and
Energy XXI (Bermuda) Ltd. plan more drilling next year to assess
“It’s a really positive contribution,” said Mary Novak,
managing director of energy services at HIS Inc.’s Global
Insight in Lexington, Massachusetts. “We need to find a lot
more of these.”
A 4 billion-barrel field would contain enough oil to supply
every refinery on the U.S. Gulf Coast for almost 19 months. At
current crude prices, such a find would be worth $300 billion,
exceeding the gross domestic products of all but 28 of the
Bucking a Trend
The estimate increase for Blackbeard bucks the trend of
recent years, when most discoveries have been a few hundred
millions barrels or less, Novak said. In the past five years,
total discoveries outside the Organization of Petroleum
Exporting Countries averaged 7 billion to 8 billion a year, down
from 20 billion annually in the 1970s, according to Peter Wells,
director of U.K. research firm Neftex Petroleum Consultants Ltd.
Irving, Texas-based Exxon Mobil quit Blackbeard in 2006
after a failed $200 million effort to drill 32,000 feet (9,750
meters) below the sea floor for what would have been the world’s
deepest well. Exxon Mobil wanted to probe a layer of rocks and
sand known as the Miocene for potential natural-gas reserves.
Exxon Mobil shut down the project and plugged the well with
concrete after descending to 30,067 feet, where pipes and drill
bits encountered more pressure and heat than they could bear.
McMoRan obtained control of Blackbeard last year as part of
its $1.1 billion acquisition of offshore assets from Newfield
Exploration Co., which held a stake in the field during Exxon’s
Oil and Gas
McMoRan has reached a depth of 33,000 feet and plans to
have discussions with Plains and Energy XXI in the next few
weeks about whether to continue to 35,000 feet or stop so
additional wells can be drilled nearby, Moffett said today.
McMoRan’s engineers believe the prospect contains both
crude oil and natural gas, he said. If the field holds the
equivalent of 4 billion barrels, McMoRan’s 32.3 percent stake
would entitle it to about 1.29 billion barrels of reserves, or
21 times the company’s proved reserves as of the end of 2007.
“This is a massive structure,” Moffett, 70, said today
during a conference call with investors and analysts. “Looks
like we got a potential major discovery here.”
Even if Blackbeard’s reserves are confirmed to be 4 billion
barrels or more, it won’t flow fast enough to dent U.S. retail
gasoline prices, which jumped 14 percent in the past year,
touching a record $4.11 a gallon in July, Novak said. The U.S.
market is expected to burn 7.2 billion barrels of crude this
year, or about 34 million gallon an hour, the International
Energy Agency said in an Oct. 10 report.
Tests indicate the pressure at the bottom of the well
approaches 28,000 pounds per square inch, almost twice the force
required to crush a pickup truck, Moffett said. Higher pressure
readings suggest greater concentrations of petroleum than in
fields that cover a similar amount of acreage at shallower
depths, he said.
McMoRan shares rose $1.83, or 16 percent, to $13.18 in New
York Stock Exchange trading, and are little changed this year.
Houston-based Plain rose $4.07, or 19 percent, to $25.22, Energy
XXI climbed 28 cents, or 20 percent, to $1.70.
If McMoRan proceeds to a depth of 35,000 feet, the company
would break the record set by Chevron and its partners in 2005
at Knotty Head, which was bored to 34,189 feet below the sea
Anadarko, which discovered K2 in 2002, in June said the
field may hold 2 billion to 4 billion barrels of crude. That
would exceed the 1.5 billion contained in the BP-operated
Thunder Horse field which began production this year.
Thunder Horse, which is 25 percent-owned by Exxon, was
discovered in 1999, according to Rigzone.com, which tracks the
offshore oil and gas industry.
Rio de Janeiro-based Petroleo Brasileiro SA, Brazil’s
state-owned oil company, last year said its Tupi offshore
discovery may hold the equivalent of 8 billion barrels of crude,
the largest find in the Western Hemisphere in three decades.
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