Gulf

The Interior Department on Wednesday proposed new incentives for energy companies to increase deep natural gas production in the Gulf of Mexico (GOM), which, among other things, would provide royalty suspension incentives for nearly 2,400 existing leases in the area targeted for relief.

Enron affiliate Mariner Energy has sold its remaining 25% working interest in 32 blocks in the Falcon area in the Gulf of Mexico, including the Falcon field and the first quarter 2003 Harrier discovery located in East Breaks 758 and 759 to Pioneer Natural Resources for $121.6 million. Mariner said it will retain a 4.25% royalty interest on seven non-producing blocks in the Falcon Area. Pioneer also assumed certain contractual obligations relating to the Falcon Area from Mariner.

The Interior Department on Wednesday proposed new incentives for energy companies to increase deep natural gas production in the Gulf of Mexico (GOM), which, among other things, would provide royalty suspension incentives for nearly 2,400 existing leases in the area targeted for relief.

Gulf South said Monday it was beginning unscheduled maintenance on the Bistineau Compressor Station’s Unit # 1 that is expected to last about five days. Capacity at the pipeline’s Bistineau storage facility in North Louisiana could be affected by as much as 75 MMcf/d on injection and 125 MMcf/d on withdrawal.

BP started producing about 15,000 b/d of oil and 12 MMcf/d of gas from a single well at its Horn Mountain development in the Gulf of Mexico. Production from the facility, which is located in 5,400 feet of water 100 miles southeast of New Orleans, is expected to reach a peak rate next year of more than 65,000 b/d of oil and 68 MMcf/d of gas after a total of seven production wells are completed. BP started exploration on the field in July 1999 after acquiring leases in 1997 and 1998. The first discovery was announced in August 1999, and BP and partner Occidental Petroleum began delineation drilling immediately after that. The $600 million project, which includes the deepest free-floating dry tree drilling system in the world, went from discovery to production in about 40 months. It is expected to result in ultimate recovery of an estimated 150 million boe. BP is the operator and holds a 67% equity interest. Occidental Petroleum holds the remaining 33%.

Devon Energy and ChevronTexaco have signed a joint participation agreement covering deepwater exploration projects in the Gulf of Mexico. The deal calls for Devon to participate in a four-well drilling program in exchange for a 25% working interest in 71 ChevronTexaco deepwater blocks. To date, 14 exploratory prospects have been identified on the joint-venture acreage.

Devon Energy and ChevronTexaco have signed a joint participation agreement covering deepwater exploration projects in the Gulf of Mexico. The deal calls for Devon to participate in a four-well drilling program in exchange for a 25% working interest in 71 ChevronTexaco deepwater blocks. To date, 14 exploratory prospects have been identified on the joint-venture acreage.

Dallas-based independent Remington Oil and Gas Corp. has made two discoveries in the Gulf of Mexico, with first production for both set in early 2003. The discoveries, West Cameron block 426 and East Cameron Block 377, are two of the company’s 11 exploratory wells so far this year, with seven completions and a 64% success rate. According to the company, East Cameron 185 #2 was drilled to 15,100 feet. The company is evaluating future locations to find higher gas saturation; the East Cameron well had “excellent gas shows” but an electric log analysis indicated low saturation. Now, Remington is sidetracking this well to an optimum structural position to capture hydrocarbon pay intervals at about 11,000 feet. The well will be completed and then tied back to the company’s production platform on block 184. Through 2002, Remington expects to drill another 13 exploratory wells. Since 1998, it has drilled 129 with 97 completions and a 75% success rate.

Citing “inclement weather in the Gulf of Mexico,” Tennessee canceled the quarterly pigging of the Header and East Leg segments of the Blue Water System offshore Louisiana that had been Monday through Thursday this week (see Daily GPI, Sept. 6). The next quarterly pigging is scheduled for Nov. 11-14.