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McMoRan Makes Massive Find US Gulf XOM Reject oil field (Blackbeard)

Home Forums Refining Community Refinery News McMoRan Makes Massive Find US Gulf XOM Reject oil field (Blackbeard)

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    Charles Randall
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    <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
    the reserves.
         “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
    world’s nations.

                             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
    tenure.

                               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.

                            High-Pressure Well

         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
    surface.
         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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