Gulf of Mexico (GOM) deepwater explorer Nexen Inc. said Thursday the six-month drilling moratorium imposed by U.S. officials (see Daily GPI, July 14) likely will result in "no significant impact" this year.
"It will likely delay our exploration and appraisal drilling programs but have little cash cost to us for the remainder of the six-month period," CEO Marvin Romanow told analysts during a conference call Thursday. The Calgary-based producer also issued its 2Q2010 earnings report (see related story).
"Like a lot of other operators, we'll look at how the regulatory environment unfolds...and the implications of that," he said. "When an environment becomes a bit uncertain, you wait until the framework unfolds and then move forward."
Nexen partners with other offshore operators and "they, like everybody else, are waiting to see how the specifics in the Gulf unfold," said Romanow. "As BP makes more progress in containing the [Macondo] well and improving the situation, we'll move the dialogue back to what we need to have as a positive and constructive industry in the Gulf.
"We are interested in what the deepwater has to offer and we think companies we talk to have similar feelings...But we need more specificity than what we see today."
To date, Nexen's Outer Continental Shelf and deepwater production "are unaffected," said Romanow, and "for the remainder of the six-month period, we expect our costs to be modest, if anything...we continue to expect our Gulf of Mexico production for the year to average between 20,000 and 28,000 boe/d before royalties," or 17,000-25,000 boe/d after royalties.
Prior to the unfolding disaster, Nexen and Shell Offshore Inc. in March made a large deepwater discovery in the Appomattox field in Mississippi Canyon blocks 391 and 392.
"This has the potential to be our best discovery in the Gulf of Mexico," said the CEO. "Nexen's long-term plans still depend on exploiting that field and developing other offshore discoveries."
The Appomattox field, where Nexen is a 20% partner, is the third discovery in the area following earlier discoveries at Shiloh (20%) and Vicksburg (25%). Additional appraisal wells for Appomattox were being considered for later in the year but were delayed because of the drilling moratorium. Shell Offshore operates all three discoveries.
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