Deepwater

BP plc plans to “retrieve and rebuild” all of the seabed production equipment from the Thunder Horse field in the deepwater Gulf of Mexico (GOM), a significant setback which could push the ramp-up to mid-2008 — as much as three years longer than originally anticipated.

Of 55-56 producers ranging from Amerada Hess to Woodside Energy that still hold royalty-free deepwater oil and natural gas leases, the Minerals Management Service (MMS) is actively renegotiating with 10 producers to correct the oversight that is costing the federal government billions of dollars, the head of the MMS told the House Government Reform Committee Thursday.

Two of six deepwater leases underpinning the potentially large Gulf of Mexico discovery that was announced by Chevron Corp., Devon Energy Corp. and Statoil ASA last week (see Daily GPI, Sept. 6) do not include price thresholds, which would make a certain volume of production from these leases royalty-free despite the high energy prices, a Minerals Management Service (MMS) official confirmed Tuesday.

Petroleos Mexicanos (Pemex), Mexico’s state-owned oil company, has begun drilling a deepwater exploration well in the Gulf of Mexico that could hold up to 10 billion boe. The Noxal exploration well, located offshore Veracruz in 3,000 feet of water and 13,000 feet underground, could rival Mexico’s Cantarell field, which now accounts for about 60% of the country’s output, Pemex CEO Luis Ramirez said.

Dominion Exploration and Production said it started gas production from the Rigel and Seventeen Hands deepwater fields, located about 120 miles southeast of New Orleans in Mississippi Canyon Blocks 296 and 299, respectively, and expects production to reach 160 MMcf/d by the end of the month.

House Republican lawmakers have begun an inquiry into the way the Interior Department has implemented the royalty-relief program for deepwater oil and natural gas production that Congress approved in 1995.

Connecticut’s outspoken attorney general wants FERC to release critical information about a proposed deepwater liquefied natural gas (LNG) import terminal to be located off the coast of Connecticut and Long Island, without first formally filing a request and signing a non-disclosure agreement with the agency.

Williams said it has started receiving gas and oil production at its Devil’s Tower deepwater spar in the eastern Gulf of Mexico from the Triton and Goldfinger fields, 140 miles southeast of New Orleans on Mississippi Canyon Blocks 771, 772 and 728.

Chevron Corp. on Thursday boosted its 2006 capital and exploratory budget by 35%, to $14.9 billion, earmarking $3.3 billion for projects in the U.S. upstream, including the deepwater Gulf of Mexico, liquefied natural gas (LNG) and gas-to-liquids (GTL) facilities. Chevron also will repurchase another $5 billion in shares over the next three years; it has repurchased $5 billion in shares since April 2004.