Wells

Kerr-McGee has ramped up development of its Constitution field in the Gulf of Mexico (GOM), which is estimated to have proven and probable reserves of about 110 MMboe. First production is expected by mid-2006, with peak production expected to reach 40,000 bbl/d and 75 MMcf/d in 2007.

The Houston Exploration Co. on Thursday announced three natural gas discoveries in the shallow waters of the Gulf of Mexico (GOM). The wells, which together are expected to produce about 35 MMcf/d, will begin ramping up this year, with the first well set to begin production in August.

Calgary-based Canadian Superior Energy Inc. said that it has commenced drilling of the first of three deep gas wells it proposes to drill over the next 90 days in the Farmington, Umbach and Altares areas of northeast British Columbia. The first test well on this new 5,120-acre prospect is targeting the highly prospective Kiskatinaw formation at a cost of approximately C$1.5 million and it will be drilled to a total depth of 2,500 meters. The company estimated reserves range up to 20 Bcf per well with deliverability in the area ranging from 8 to 10 MMcf/d per well. Several follow-up locations are present on this new play. Furthermore, Canadian Superior’s President Greg Noval said that in the Umbach area, approximately 80 miles northwest of Fort St. John, operations are currently underway to drill a 1,160 metre test well targeting the lower Cretaceous Cadomin and Gething formations. Canadian Superior is the operator of this 1,250-acre prospect with a 62.5% working interest. The new Umbach well is a follow-up well to a recent Canadian Superior discovery at a-45-F/94-H-3, which was put onstream by the company at 1.5 MMcf/d in late November. In addition, in the Altares area approximately 45 miles west of Fort St. John, Canadian Superior is preparing to drill a 2,525 metre Debolt test targeting large reserves estimated at from 100 to 500 Bcf in the Mississippian formation. During the third quarter of 2001, Canadian Superior acquired 3,200 gross acres (1,600 net, 50% working interest) on this high impact foothills over-thrust prospect located in northeast British Columbia. A well is planned for drilling in early 2002. Canadian Superior said the Kobes field, which is directly on trend to the northwest, is a 250 Bcf field, which was developed on a similar Mississippian over-thrust play. Canadian Superior is operator of the prospect and a detailed seismic program is currently underway to define drill-site locations for early next year.

Denver-based MarkWest Hydrocarbon Inc. announced preliminary results for three new gas wells in which it holds interests. In eastern Michigan, the Sims 2-7 well was successfully recompleted, testing at 4.4 MMcf/d of sour gas and 400 bbl/d of condensate and natural gas liquids. The well is the second to be connected to the Au Gres gas plant, modified by MarkWest and its partners in 2000. The well is scheduled to be on production by mid-July. In western Michigan, MarkWest and its partners have made two gas discoveries. The previously drilled Victory 32, in which MarkWest owns 8.5%, successfully tested before being shut in for pipeline connection. The reef play is only a few miles from the company’s sour gas pipeline. The third well, the Victory 21, in which MarkWest holds a 14.6% interest, found a reef and is shut in awaiting equipment to complete and test the well.

Though additional wells need to be drilled before the total proved reserves are accurately measured, Murphy Oil Co. announced Thursday that its Front Runner South prospect in Green Canyon Block 339 offshore Louisiana has exceeded expectations. The reserve estimate is expected to be more than the pre-drill projection of 40-60 MMboe.

To encourage drilling of marginal deep-water wells (200 metersand greater) in the Gulf of Mexico, the Minerals Management Service(MMS) has proposed a new rule expanding discretionary royaltyrelief for properties that would otherwise be considereduneconomic.

Statoil Energy’s sale of 1.1 Tcf of gas reserves and 6,500 wellsin the Appalachian Basin to Equitable Resources earlier this monthfor $630 million was the first of three possible transactions, aspokeswoman said last week. The latter two, which would include thecompany’s top-30 trading operations, and growing power developmentarm, are expected to involve an eastern-U.S. electric utility buyerand take place before March, according to one inside source.

The company began moving its Houston operations to its Alexandria headquarterslast week in preparation for closing down the Houston office. The Houstonmarketing and trading group is expected to be operating at least throughthe end of the month and plans to come up with a transition plan to ensureservice will not be disrupted.

Exxon has blown away previous production test records for gaswells in the Gulf of Mexico and the state of Alabama. The companyannounced yesterday that it tested a well in Mobile Bay about 2.5miles offshore south of Dauphin Island at 126 MMcf/d. The previousrecord in Alabama state waters was 91 MMcf/d. The well also testedat a higher open flow rate than any well in the federal OuterContinental Shelf area of the Gulf. The OCS record was 113 MMcf/d.