McMoRan reports string of gulf deep shelf finds

March 28, 2005
McMoRan Exploration Co., New Orleans, reported several deep gas successes on the Gulf of Mexico shelf off Louisiana, most of which qualify for federal royalty relief on early production volumes.

McMoRan Exploration Co., New Orleans, reported several deep gas successes on the Gulf of Mexico shelf off Louisiana, most of which qualify for federal royalty relief on early production volumes.

The company has rights to 250,000 gross acres and is still acquiring acreage and identifying prospects.

The company expects to see production climb this year from an estimated 15 MMcfed first quarter average because proximity to infrastructure aids quick connection of completed wells, several of them near or below 20,000 ft.

"The inability of modern seismic technology to develop hydrocarbon indicators or 'bright spots' at these depths has resulted in relatively few wells being drilled to explore for these large potential reservoirs associated with deep structures on the Gulf of Mexico shelf," McMoRan noted.

The company, which faced liquidity issues as recently as 2 years ago and posted losses in 2003 and 2004, reported a 195% increase in proved reserves to 49.9 bcfe at the end of 2004. The yearend reserves excluded amounts from McMoRan's Minuteman or Dawson Deep discoveries and potential reversionary interest from the JB Mountain and Mound Point deep shelf discoveries.

In December 2004 McMoRan acquired the 66.67% interest it did not own in Main Pass Block 299 field, with reserves of 24.9 bcfe. The field produced 2,800 b/d of oil until Hurricane Ivan caused its shut-in in September 2004 by damaging a third party terminal that handled the sour crude. McMoRan said it is pursuing an alternate plan to process and sell future oil production.

McMoRan has proposed to develop a $440 million LNG receiving terminal in 210 ft of water on the block (OGJ Online, Mar. 11, 2005).

Deep shelf progress

Production test results demonstrate the capacity of deep gas discoveries to flow at significant rates and pressures, McMoRan said.

The Hurricane Upthrown discovery in 10 ft of water on South Marsh Island Block 217 is to go on production in April 2005 through the Tiger Shoal field facilities that handle gas from JB Mountain and Mound Point fields.

It flowed 30 MMcfd of gas and 1,500 b/d of oil through a 26/64-in. choke with 9,290 psi at the end of the test period. Shut-in tubing pressure is 10,700 psi. The well is eligible for royalty relief on the first 5 bcfe of gross production.

Drilled to TD 19,664 ft, the discovery logged 205 gross ft of hydrocarbons in two Rob L pay zones. McMoran, with 27.5% working interest, holds 7,700 gross acres around Hurricane.

The Minuteman discovery well on Eugene Island Block 213 went on line Feb. 25, 2005, at 15 MMcfd of gas and 262 b/d of oil on an 11/64-in. choke with 14,720 psi flowing tubing pressure and was expected to deliver 20-25 MMcfed through company facilities 7 miles away at Eugene Island Block 215 (OGJ Online, Nov. 9, 2004).

The well, in 100 ft of water, cut a laminated sand section at 19,700-20,230 ft enroute to TD 21,024 ft in 2004. Wireline logs from a sidetrack hole confirmed 60 gross ft of hydrocarbons with excellent porosity and permeability in the upper part of the laminated sand section.

The Minuteman lease, operated by Spinnaker Exploration Co., Houston, is eligible for royalty relief on the first 25 bcf of gas. McMoRan holds one third interest and controls 9,600 acres on the prospect and 10,000 surrounding acres.

Helis Oil & Gas Co. LLC, private New Orleans independent, as operator and McMoRan were to test and suspend a discovery at the West Cameron Block 43 No. 3 well pending the planning of further drilling and development.

The well cut more than 100 ft of gross pay in three Lower Miocene hydrocarbon-bearing sands. TD is 18,800 ft in 30 ft of water. McMoRan's working interest is 23.4%, and the well is eligible for royalty relief on at least 15 bcf of gas. Houston Energy LP generated the prospect.

Other successes

McMoRan was waiting on 20,000 psi completion equipment to test the Blueberry Hill well in 10 ft of water on Louisiana State Lease 340 about 7 miles east of JB Mountain field.

The company cemented 41/2 in. production liner after wireline logs indicated four potentially productive hydrocarbon-bearing sands. TD is 23,903 ft. McMoRan is operator with 35.3% working interest.

The company plans to start production from the Deep Tern C-1 take point well on Eugene Island Block 193 in mid-2005.

Spudded on Jan. 20, 2005, Deep Tern C-1 is projected to 17,100 ft. The sidetrack operations are designed to encounter the Basal Pliocene gas reserves proved by 86 gross ft of hydrocarbon-bearing sands logged in the C-2 well in an effort to accelerate production from that interval. C-2 went on line Dec. 30, 2004, from Miocene pay.

McMoRan holds a 20.6% net revenue interest in the C-1 sidetrack and controls 17,500 acres in the Deep Tern area 50 miles offshore in 90 ft of water.

McMoRan spudded the Korn prospect Feb. 3 projected to 23,000 ft in 60 ft of water on South Timbalier Blocks 97/98. It spudded the King Kong prospect Feb. 20 projected to 19,500 ft in 12 ft of water on Vermilion Block 16/17. It was to have spud a well in early March on the Delmonico prospect in Lake Sand field projected to 19,000 ft in 10 ft of state waters off Iberia Parish in the northwestern part of the Eugene Island area.

The company plugged the Caracara well in 115 ft of water on Vermilion blocks 227/228 at TD 17,454 ft.