Recent approval of the Typhoon project has launched BHP Petroleum Pty. Ltd.'s first commercial deepwater oil and gas development in the Gulf of Mexico. BHP and operator Chevron Corp. each hold half the project.
Located in 2,000 ft of water 62 miles off Louisiana on Green Canyon Blocks 236 and 237, Typhoon will be developed through subsea completion and tieback of four existing appraisal wells. An Atlantic SeaStar mini-tension leg platform, which has proved successful on two other gulf fields, will be built and installed as a host facility.
Production from Typhoon is expected to start in the third quarter of 2001, less than 4 years after discovery, and peak at 40,000 b/d of oil and 60 MMcfd of gas. BHP estimates the commercial life of the field at 6-8 years.
BHP's total capital expenditure for the project is $192 million (Aus.), or $128 million (US).
Typhoon, Mad Dog
The Typhoon project is in a portion of the gulf that has been actively explored in recent years, with production and pipeline infrastructure in place. Two export pipelines will transport Typhoon's oil and gas to existing markets.
Major producers in that general area include Shell Oil Co.'s Bullwinkle field in 1,200 ft of water; Genesis, operated by Chevron in 2,597 ft; and Troika, operated by BP Amoco PLC, in 2,300 ft. BHP has additional exploration potential near Typhoon and is participating in major appraisal programs on the Mad Dog, Atlantis, and Neptune discoveries in the nearby Atwater Foldbelt fairway in the ultradeep gulf.
The first appraisal well for the Mad Dog discovery was recently drilled in 4,420 ft of water on Green Canyon Block 782, 2 miles north of the discovery, to 20,268 ft TD. It encountered 265 net ft of oil play. Fluid samples were taken, and 140 ft of core was recovered from that well.
The appraisal well is 1,000 ft inside the northern boundary of the Mad Dog field, which encompasses Green Can-yon Blocks 825, 826, and the southern half of 782. Another appraisal well is planned outside that unit.
BHP has 11.44% interest in the Mad Dog discovery. BP Amoco is operator on that project, with 63.56% interest. Unocal Corp. has the other 25%.
BHP's gulf activity
BHP acquired the Typhoon leasehold position with Chevron at the 1995 central gulf lease sale as part of its strategic decision to aggressively position itself in selective deep and ultradeep play fairways in those waters. The company has direct interests in 35 other blocks in that area of the gulf. Several are in partnership with Chevron, but BHP has full ownership of about half.
Through various lease sales and joint venture agreements with several strategic partners, BHP has acquired interests in 243 blocks, primarily in the Green Canyon, Atwater Valley, Mississippi, and Walker Ridge areas of the gulf. That was accomplished in advance of much of the industry interest in the highly prospective deepwater area, at a cost significantly lower than many competitors, says BHP.
Because the Typhoon leases were issued before the Deep Water Royalty Relief Act became effective in 1996, the project doesn't qualify for automatic royalty suspension. But the participants have asked the US Minerals Management Service to determine whether the field qualified under the associated guidelines for royalty relief for up to 87.5 million boe of deepwater production.
Farmout
BHP recently signed a significant farmout deal related to some of its other gulf properties. The deal, with Total Exploration Production USA Inc., involves 21 leases.
Total will earn a 30% interest in each of the Chinook, Klondike, and Cascade prospects in the Walker Ridge blocks. BHP retains 70% interest and the operatorship.
Full details of the farmout have not been revealed, but BHP said Total will earn its interest principally by paying BHP's share of the drilling costs on the three prospects.
The first exploration well is scheduled for late 2000 on the Chinook structure, which is about 45 miles southwest of Mad Dog and about 200 miles off Louisiana. Water depths in the Walker Ridge leases vary between 6,000 ft and 9,000 ft.
BHP plans to focus its exploration efforts on the deep waters of the Gulf of Mexico during the next 5-10 years as it strives to replace Bass Strait as its principal oil and gas producing asset. The company expects to spend at least $150 million (Aus.)/year over the next few years-more than half its total exploration budget-and drill 5-10 wells a year on its leases in the region.