McMoRan Exploration Co.’s gas discovery at Eugene Island appearsto be twice as big as expected, and now is expected to recover 100Bcf of natural gas. The well, will be put into production in thesecond quarter by the New Orleans-based company, expects productionto reach 100 MMcf/d by then.

Initially, the target for the Eugene Island Block 193 No. 3exploration well in the North Tern deep prospect was a grossunrisked potential of approximately 50 Bcf. However, the pay sandsencountered were about twice as thick as indicated by the 3-Dseismic data. The drilling has discovered 230 feet of net gas payin two sands, with the first between 16,460 and 16,613 feet and thesecond between 16,790 and 16,952 feet. In the Eugene Islandprospect, McMoRan holds a 53.4% working interest and a 42.9% netrevenue interest, controlling 10,000 acres in 90 feet of water inan area about 50 miles offshore Louisiana.

McMoRan provided an exploration and development activitiesupdate Tuesday, including a second discovery well — the Main PassBlock 86 No. 2 well — in the Shiner prospect. There, the companyhas discovered 20 gross feet of hydrocarbon pay between depths of2,668 and 2,688 feet. The No. 2 well, which targeted a separateobjective about one mile northwest of the first well, reached atotal depth of 3,000 feet. The Main Pass Block, covering about10,000 acres, is about 45 miles offshore Louisiana in 70 feet ofwater.

McMoRan, which holds a 71.3% working interest and a 51.3% netrevenue interest in two wells already drilled in the Main Passblock, wants to drill up to three wells within a 3-D seismic brightspot outline, which it estimates could produce as much as 20 Bcf.The Main Pass No. 1 well has 108 feet of gross pay at 9,888 feetdeep — about 20 feet more than previously estimated.

“Although the two discovery wells have not been flow tested,McMoRan believes the aggregate initial flow from the two wellscould exceed 25 MMcf/d,” said the company. Additional wells areexpected to be drilled there this year to test 3-D seismic brightspot objectives between 2,500 and 10,000 feet in the Main Pass86/97 area.

Along with its drilling update, McMoRan has revised its futureabandonment costs estimate with its non-operating sulfurproperties, reflecting a charge of $8 million in the fourthquarter. It expects to receive more than $80 million in potentialnear-term proceeds from its sulfur business.

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