A shortage of rigs will force Nexen Inc. and its partners to delay drilling the deepest of deepwater wells in the Gulf of Mexico (GOM) until 2009 — three years later than originally planned.
Nexen CFO Marv Romanow revealed the delay during a conference call Wednesday to discuss the Canadian producer’s 2008 spending plans (see Daily GPI, Dec. 6). Nexen, which operates the deepwater Knotty Head field, holds a 25% stake in the project, along with Chevron Corp., StatoilHydro ASA and BHP Billiton Ltd. Knotty Head is estimated to hold about 350 million boe.
Romanow told investors and analysts that appraisal of the field has been put on hold until the partners have a rig capable of boring a well more than five miles deep.
“At this time, we’re still searching for a rig,” Romanow said. “We’ve rejected a couple of alternatives that we have evaluated, and this well may be delayed until 2009 when our Ensco [International Inc.] rig is available.”
Chevron drilled the first exploratory well at Knotty Head to depths more than 30,000 feet deep, and the appraisal wells were to be drilled in 2006. The field is located about 170 miles southeast of New Orleans in water about 3,500 feet deep. Nexen hired Ensco in January 2006 to build a rig to drill in waters up to 8,500 feet deep, and under a two-year leasing agreement Nexen will pay about $331,000 a day for the vessel. The rig is expected to be finished in early 2009.
“Knotty Head is a 33,000-, 34,000-foot well…so you really don’t want to be at the short end of rig capacity when you think of the kind of rig to put on there,” Romanow added.
The CFO said the lack of drilling equipment has forced Nexen to delay other GOM projects — but that could change as 2008 progresses.
“In the Gulf of Mexico…we have more drill-ready locations than we have been able to put in the budget largely because of equipment availability,” Romanow said. “If that equipment availability improves through the course of 2008, I could…expand our capital investment program there and drill additional exploration wells.”
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