Marathon Oil Corp.’s Canadian subsidiary is permanently abandoning a deepwater wildcat natural gas well offshore Nova Scotia after failing to find any commercial quantities of oil and natural gas. When Marathon first discovered gas in the Annapolis block in 2002, it had estimated there could be between 5-15 Tcf of natural gas within the play (see Daily GPI, Aug. 14, 2002).

In the initial discovery in 2002, Marathon encountered 100 feet of net gas pay over several zones, enough for Marathon to declare a discovery and to start planning additional seismic and drilling activity. Five exploration wells were begun within the Annapolis block in 2003, which is the region’s first modern-era deepwater well.

The 21,903-foot Crimson F-81 well, located 211 miles southeast of Halifax in 6,861 feet of water, will be permanently plugged. Marathon Canada Petroleum ULC holds 30% interest in the well and serves as operator; other stakeholders are EnCana Corp., 26%; Norsk Hydro Canada Oil and Gas Inc., 25%; and Murphy Oil Co. Ltd., 19%. Marathon hired Houston-based Transocean’s Deepwater Pathfinder to drill the Crimson well in early June.

Marathon and its partners will analyze data from the Crimson well to help determine next steps regarding the Annapolis discovery, as well as the adjacent Cortland and Empire blocks. Marathon is operator of the Empire, with 50% interest, and holds a 75% interest in the Cortland block. Other interest owners in the Empire block are Murphy and Norsk Hydro, each with a 25% interest. Murphy holds the remaining 25% interest in the Cortland block. The Empire and Cortland blocks are adjacent to the Annapolis block.

Marathon earlier had announced plans to drill 16 major wells worldwide this year, including two more wells offshore Nova Scotia in 2005. There was no word whether the Scotian drilling would proceed as planned.

The latest announcement is another blow to the prospects for exploration offshore Nova Scotia. In May, EnCana Corp. abandoned its Weymouth A-45 deepwater exploration well, which was about 155 miles southeast of Halifax (see Daily GPI, May 7). At 21,391 feet, it was, at the time, the deepest well drilled in Atlantic Canada. Weymoth was spudded in October 2003.

Offshore Nova Scotia, EnCana also operates a shallow water natural gas discovery at Deep Panuke, which has been put on hold and is being reevaluated following disappointing early results. Initially, EnCana expected the project would yield up to 1 Tcf of gas reserves and produce 400 MMcf/d, but it would be incapable on its own of shouldering the cost of long-term pipeline transportation to markets in the Northeast (see Daily GPI, March 2).

Fadel Gheit, an analyst with Oppenheimer & Co. wrote that Marathon’s announcement “definitely is not good news, but on the other hand, it is not the end of the world. It’s a minor setback whenever a company drills a dry hole regardless of the size of the company because a dry hole means you’re throwing away money.” He noted that the industry success rate for exploratory drilling is about 25%.

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