Coming a day after the company decided to upgrade its exploration and production strategy, Kerr-McGee Corp. said last Thursday its board of directors has approved the development of the Red Hawk area in the deepwater Gulf of Mexico, in Garden Banks Block 877. With estimated proven reserves of more than 250 Bcf of natural gas, the Red Hawk natural gas field will be developed using a new state-of-the-art mini-floating production facility.
Red Hawk, located in more than 5,300 feet of water, will be Kerr-McGee’s deepest development to date. Kerr-McGee Oil & Gas Corp., a subsidiary of Kerr-McGee Corp., operates Red Hawk with 50% interest, while Ocean Energy, Inc. holds the remaining 50% stake.
“Kerr-McGee is once again at the forefront of the industry in deploying the latest technology for deepwater developments,” said Luke R. Corbett, Kerr-McGee CEO. “Use of a mini-floater reduces the threshold reserve size for a stand-alone economic development in the deep waters. This innovation opens up an extensive area for deepwater exploration and future development, enabling Kerr-McGee to capitalize on our extensive inventory of deepwater prospects.”
The company said it is in the final stages of selecting the development solution for the Red Hawk facility, which is being designed to process 120 MMcf/d. Construction is expected to begin in October with development drilling expected to start in early 2003. First production at Red Hawk is anticipated in the second quarter of 2004.
Located 100 miles from the company’s Gunnison development and 150 miles from the Nansen and Boomvang developments, the Red Hawk development will serve as another processing hub for the deepwater Gulf. Kerr-McGee and Ocean hold interests in 27 other blocks in the Red Hawk area that offer additional satellite exploratory opportunities.
“The Red Hawk development is consistent with our strategy of developing core areas in high-potential trends,” said Kenneth Crouch, senior vice president. “Red Hawk, like Nansen, Boomvang and Gunnison, will be a host structure to cost-effectively develop nearby satellite fields. This new hub will also provide the opportunity for third-party business.”
The move follows news that the company has elevated the head of its E&P operations, Dave Hager, to the corporate officer level, effective immediately. Hager will be directing a new management team and organization. As vice president of exploration and production based in Houston, Hager will be responsible for leading the company’s worldwide exploration and production team, reporting to Crouch.
Kerr-McGee, which has experienced tremendous growth over the past five years, is branching out from its main production areas in the U.S. onshore and Gulf of Mexico and the U.K. North Sea. While extending its efforts in those areas, particularly in the deepwater Gulf, the company also is expanding into worldwide deepwater operations, including the Atlantic margin, spokeswoman Debbie Schramm said. The company has been billed as the leading deepwater independent in the industry.
Kerr-McGee, as 50% owner and operator, has announced two major discoveries this year in the deepwater Gulf, at the Merganser prospect in Atwater Valley block 37, and the Northwest Navajo prospects, located on East Breaks blocks 690, 689 and 646. The 21,268-foot Merganser discovery well encountered more than 150 feet of natural gas pay in three zones, and reserves in the prospect are estimated in the range of 200 to 400 Bcf of gas equivalent. Combined reserves in the Navajo field are estimated in the range of 20 million to 30 million boe and are split approximately 40% oil and 60% natural gas. The company also has reported continued success this year in its Bohai Bay, China efforts.
“Our team of industry experts will provide the leadership necessary to ensure our success as we continue our long-term strategy to efficiently grow our global oil and gas business,” Crouch said. “We are committed to career development and succession planning. This reorganization will allow us to further capitalize on skill sets and expertise.”
Hager’s leadership team will consist of the following:
Hager formerly served as vice president of Gulf of Mexico and worldwide deepwater exploration and production in the E&P Division. A 21-year veteran with Kerr-McGee, he has worldwide experience in the oil and gas industry.
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