Anadarko Petroleum Corp. and its partners on Thursday officially sanctioned the promising Lucius project in Keathley Canyon (KC), a region in the deepwater Gulf of Mexico (GOM) that is attracting some of the top explorers in the world.
The Lucius unit, which is 200 miles southeast of Houston in waters about 7,000 feet deep, includes portions of KC Blocks 874, 875, 918 and 919. Anadarko operates the unit and holds a 35% stake. Co-venturers are Plains Exploration & Production Co. (23.3%), ExxonMobil Corp. (15%), Apache Corp. subsidiary Apache Deepwater LLC (11.7%), Brazil's Petroleo Brasilerio, or Petrobras (9.6%), and Italy's Eni SpA (5.4%). The blocks are said to hold at least 300 million boe; Tudor, Pickering, Holt & Co. (TPH) on Thursday estimated the reserves at 540 million boe.
The offshore platform as envisioned would be able to produce 80,000 b/d of oil and 450 MMcf/d of gas. First production is planned for 2014 from six initial producing wells.
"We expect Lucius to be among the most economic projects in our portfolio, as we plan to utilize 'off-the-shelf' technology and leverage our proven project-management skills in an area where we have extensive expertise," said Anadarko COO Al Walker. The reserves are in "relatively shallow and highly productive reservoirs that can be developed in a capital efficient manner."
The massive KC development has been on the fast-track since Anadarko announced the results of a sidetrack well on the Lucius prospect in late 2009, which confirmed a major oil and natural gas discovery (see NGI, Feb. 1, 2010). Separately last year ExxonMobil and its partners added fuel to the news after encountering oil and natural gas at the Hadrian North prospect in KC 919, which extended into KC 918. ExxonMobil in June confirmed two major discoveries in the region (see NGI June 13).
With the deepwater moratorium lifted, Anadarko and its partners joined with ExxonMobil and its partners to finalize the Lucius unitization agreement in July (see NGI, July 25). Development of the project, which is estimated to cost $2 billion, is under way. The Lucius stakeholders also entered into an agreement with the Hadrian South partners to produce natural gas from the Hadrian South field through the Lucius facility in return for a production-handling fee and reimbursement for any required facility upgrades.
"Once completed, Lucius will establish important infrastructure in an emerging area of the Gulf of Mexico where we have identified additional prospects and opportunities," said Walker. "We expect to have an active drilling program in the unit beginning in 2012, and we look forward to working with our partners to achieve first production in 2014."
The Lucius unit would be developed with a truss spar floating production facility, which is currently under construction at Technip's facility in Pori, Finland. The facility would be the largest of Anadarko's operated spars -- a deepwater production solution pioneered by the company in 1997.
"The Lucius unit is a world-class oil and gas accumulation in an emerging area of the deepwater Gulf," said Apache CEO G. Steven Farris. "The decision to sanction the Lucius development is a milestone for Apache: It is the first major deepwater Gulf project approved since our acquisition of Mariner Energy in 2010" (see NGI, April 19, 2010).
The decision to sanction Lucius came on the heels of last Wednesday's western Gulf of Mexico lease sale, the first since the deepwater drilling moratorium was lifted (see related story). The sale is a "positive step toward GOM normalcy," said TPH analysts.
ConocoPhillips was the most active bidder, with $115 million winning bids. It also bid the most for what may be another promising KC prospect: Block 95. Earlier this month the Houston-based company, which is readying a spinoff of its refinery operations to reemerge as the largest pure-play explorer in North America, said it planned to spend $15.5 billion for its capital program in 2012, with 60% of the money directed to exploration and production in North America (see NGI, Dec. 12).
ConocoPhillips is a "busy holiday shopper" and its "appetite in the GOM lease sale doesn't surprise as management has stated its interest in augmenting its GOM exploration portfolio," said the TPH team. The producer has a "tiny current GOM footprint, just 1% of total production." However, analysts noted that KC Block 95 "lies just 20 miles west" of BP plc's Tiber discovery in the Lower Tertiary (KC Block 102), which holds an estimated 3 billion bbl of oil. BP paid $406,000 for the block in 2003.
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