The Minerals Management Service (MMS) released a notice in the Federal Register on Lease Sale 190, scheduled for March 17, 2004. The sale will cover 22.6 million acres and 4,281 available blocks in the Central Gulf of Mexico Outer Continental Shelf planning area offshore Louisiana, Mississippi, and Alabama. Estimates of undiscovered hydrocarbons expected to be discovered and produced as a result of this sale proposal range from 276 to 654 million bbl of oil and 1.59 to 3.30 Tcf of natural gas. Blocks are located from three to about 210 miles offshore in water depths ranging from four to more than 3,400 meters. The lease sale includes a continuation of shallow-water deep gas and deepwater oil and gas royalty relief measures that were adopted in other recent Gulf of Mexico OCS lease sales for the purpose of increasing domestic natural gas and oil production. In addition, lessees can apply for added discretionary royalty relief on these leases, if needed. The next lease sale will be Eastern Gulf of Mexico Sale 189 on Dec. 10. It will include 256 blocks in the Eastern GOM Planning Area and covers 1.47 million acres. Estimates of undiscovered economically recoverable hydrocarbons range from 65 to 85 million barrels of oil and 0.265 to 0.34 Tcf of gas. The MMS estimates the net economic value for sale 189 to be between $100 million and $500 million. For more details visit

McMoRan Exploration Co.‘s JB Mountain Offset, located in South Marsh Island Block 223, has drilled to a total measured depth of 21,896 feet, and wireline logs indicate that the well encountered “significant intervals” of hydrocarbon pay in the Gyrodina sand section. The wireline logs confirmed that the hydrocarbon intervals are structurally high to the original JB Mountain well, and because of the location of the well near existing production facilities, production can be brought on-line rapidly, McMoRan officials said. The JB Mountain Offset well began drilling in June 2003 and is located less than one mile southeast of the initial JB Mountain discovery well. Production from the initial well began in early June 2003, and production currently is 50 MMcfe/d. The JB Mountain and Mound Point deep-gas fields are located in 10-feet water depths, in an area where McMoRan is a participant in an exploration farm-out program with El Paso Production Co.

Texas Railroad Commission (TRC) Chairman Victor Carrillo has called on the state’s governor to help create a Texas Energy Plan, which he said will strengthen not only the economy but its energy industry. Carrillo, who joined the commission last February and was elected its chairman in September, said the plan, if enacted, would promote energy conservation and renewable energy sources, and find ways to reduce U.S. dependence on foreign oil and energy sources. The commissioner now is touring the state to promote the plan’s creation, and recently sent a letter to Gov. Rick Perry requesting an executive order to create a Texas Energy Planning Council, which would include legislators, policymakers, industry representatives and academia. Carrillo said there is an abundance of natural resources in Texas, but “we continue to face declining oil and gas production from our peak production of the early 1970s. Although we still have plenty of reserves, it is crucial that we initiate a comprehensive and coordinated effort to ensure our state’s future energy security.” If Perry approves the planning council, Carrillo said the TRC would be “well suited and willing” to staff and house the working group to formulate a state plan. According to Carrillo, the plan would examine state and federal laws and policies that encourage domestic energy production and removable obstacles to energy independence, as well as new technologies and tactics to encourage Texas energy production and energy independence.

Kinder Morgan Energy Partners (KMP) and Marathon Oil Corp. have entered into an agreement where KMP will purchase an additional 42.5% interest in the Yates Field Unit in West Texas from a subsidiary of Marathon for $227.5 million. Discovered in 1926, the Yates Field originally had more than 5 billion barrels of oil in place, about 30% of which has been produced. Current production from the field is about 20,000 b/d of oil. Once the sale is complete, KMP’s working interest in Yates will increase to nearly 50% and the company will assume operatorship of the asset. Also included in the purchase price is $15 million for Marathon’s 100% interest in the Yates oil gathering system and Marathon Carbon Dioxide Transportation Co., which owns a 65% interest in The Pecos Carbon Dioxide Pipeline Co. The Yates Gathering System consists of approximately 87 miles of pipeline ranging from two to 12 inches in diameter that gathers production and transports it to central tank batteries for shipment to markets. The companies expect to close the transaction in the fourth quarter. Once complete, Marathon said it will have sold approximately $1.2 billion in assets in 2003 as part of a program to sell non-core assets. The company noted that proceeds from these sales are being used to strengthen its balance sheet and to invest in “high value” business opportunities such as the company’s purchase of Khanty Mansiysk Oil Corp. earlier this year.

ONEOK Inc. has purchased 177.2 Bcfe of gas and oil reserves in East Texas with additional probable and potential reserves and related gathering systems from Wagner & Brown Ltd. of Midland, TX, for $240 million. Current net gas production from the properties is 26 MMcfe/d, and ONEOK estimates that the proved reserves yield a reserves-to-production index of 12.4 years and are 91% natural gas. J. D. Holbird, president of ONEOK Energy Resources, estimated that the purchase price was about $1.27/Mcfe. “We believe these properties will provide further developmental potential consistent with our conservative strategy of acquiring and developing reserves,” he said. The acquisition is expected to close before year’s end. Initially, the transaction will be financed through short-term borrowings. Longer term, ONEOK may finance this transaction with available cash, the issuance of equity or a combination of both, the company said.

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