Ridge Block News

The Bureau of Ocean Energy Management (BOEM) completed its required evaluation to ensure that the public receives fair market value for tracts leased as part of Central Gulf of Mexico Oil and Gas Lease Sale 227, which was held on March 20, 2013. After extensive economic analysis, BOEM has awarded 307 leases on tracts covering 1,648,831 acres to the successful high bidders who participated in the sale, which made 7,299 unleased blocks covering about 38.6 million acres available offshore Louisiana, Mississippi and Alabama. The accepted high bids are valued at $1,199,052,037. The terms of Sale 227 continued a range of incentives to encourage diligent development and ensure a fair return to taxpayers — including an increased minimum bid for deepwater tracts…

Chevron Corporation has announced an oil discovery at the Coronado prospect in the deepwater U.S. Gulf of Mexico. The Walker Ridge Block 98 Well No. 1 encountered more than 400 feet (122 m) of net pay. The well is located approximately 190 miles (308 km) off the Louisiana coast in 6,127 feet (1,868 m) of water and was drilled to a depth of 31,866 feet (9,713 m). The well results are still being evaluated, and additional work is needed to determine the extent of the resource. Chevron, with a 40 percent working interest in the prospect, is the operator of the Coronado discovery well.

Central Gulf of Mexico Oil and Gas Lease Sale 213, held on March 17 in New Orleans, attracted $949,265,959 in high bids. The sale was conducted by Interior’s Minerals Management Service (MMS) and had 77 companies submitting 642 bids on 468 tracts comprising over 2.4 million acres offshore Louisiana, Mississippi and Alabama. The sum of all bids received totaled $ 1,300,075,693. “The bidding activity at today’s sale speaks to the future of deepwater Gulf in providing vital energy production for the nation,” said Lars Herbst, MMS Gulf of Mexico regional director. A total of 151 tracts in water depths less than 656 feet received bids. This represents 32 percent of all tracts receiving bids, an increase of five percent from last year’s Central Gulf lease sale.

What About Cuba? Political allegiance notwithstanding, continuing unrest and war in the energy critical Middle East continues to wreak havoc with world oil prices, with consumers around the world struggling to keep up with fast escalating gasoline prices. While (at press time) the benchmark prices for a barrel of crude have settled just under $40, the situation has spurred new exploration and production ventures, one such speculation in the Gulf of Mexico off of Cuba. According to a recent report in The Economist (June 5, 2004 edition, page 48), Spain's Repsol has moved into position a Deep Water drilling rig off of the country's northwest coast with the intention of drilling two wildcat wells in what could amount to a successful attempt to energize a failing economy.

The U. S. Department of the Interior's Minerals Management Service (MMS) in New Orleans held a sale of offshore oil and natural gas leases in the Gulf of Mexico, attracting $300.6 million in high bids from 63 companies. Sale 175 is the ninth lease sale held subject to the provisions of the Deep Water Royalty Relief Act, passed in 1995. Of 4,203 tracts comprising approximately 22.3 million acres offshore Alabama, Louisiana, and Mississippi offered, the MMS received 469 bids on 344 tracts. The total of all bids was $454.9 million. The highest bid received was $23 million submitted by Exxon Asset Management Company for Mississippi Canyon Block 555. Approximately 34 percent of the tracts receiving bids are in ultra-deep water (more than 2,624 ft.).

The U.S. Department of the Interior’s Minerals Management Service recent central Gulf of Mexico lease sale received 1,428 bids on 723 tracts, attracting $2.9 billion in high bids – the second highest total in U.S. leasing history. Secretary of the Interior Dirk Kempthorne, who officially opened the sale, said the bids made a statement concerning the future of the Gulf of Mexico. “This historic sale emphasizes the Gulf’s strategic value for America’s energy security and the significant economic benefits of environmentally safe oil and gas production for the nation and the Gulf states,” Kempthorne said. The Gulf accounts for about a quarter of domestically produced oil and 15 percent of domestically produced natural gas in the nation.

Ziff Energy Group (ZEG), a leading North American energy consulting firm, with offices in Houston and Calgary, announces the launch of the 6th edition of its Deepwater Reducing Field Operating Costs (RFOC) study, which will evaluate 2006 operating costs for more than 2 dozen Deepwater producing assets in the Gulf of Mexico. Participation will include 9 Deepwater operators, who collectively account for over 80% of the 1.36 million barrels of oil equivalent per day (MMBOE/d) produced in the Deepwater region of the Gulf of Mexico (see map below for the locations of the floating production assets to be included; the study will also include fixed and subsea assets). Ziff Energy’s last Deepwater study was conducted 3 years ago, assessing 2003 data.

Chevron Corporation reported that it has completed a record setting production test on the Jack #2 well at Walker Ridge Block 758 in the U.S. Gulf of Mexico. The Jack well was completed and tested in 7,000 ft. of water, and more than 20,000 ft. under the sea floor, breaking Chevron's 2004 Tahiti well test record as the deepest successful well test in the Gulf of Mexico. The Jack #2 well was drilled to a total depth of 28,175 ft. The test was conducted during the second quarter of 2006 and was designed to evaluate a portion of the total pay interval. During the test, the well sustained a flow rate of more that 6,000 barrels of crude oil per day with the test representing approximately 40 percent of the total net pay measured in the Jack #2 well.

The U.S. Department of the Interior's Minerals Management Service (MMS), in New Orleans, held a sale of offshore oil and natural gas leases in the Central Gulf of Mexico attracting $171.8 million in high bids from 67 companies. Sale 172 is the seventh lease sale held subject to the provisions of the Deep Water Royalty Relief Act, passed in 1995. The MMS received 272 bids on 207 offshore tracts. 3,806 tracts comprising approximately 20,368,385 million acres offshore Alabama, Louisiana, and Mississippi were offered. The total of all bids was $199.6 million. The highest bid received was $16.6 million, submitted by Marathon Oil Company and Kerr-McGee Oil and Gas Corporation for Walker Ridge, Block 121.

According to the U.S. Department of the Interior's Minerals Management Service (MMS), deepwater drilling (1,000 ft. and deeper) shows the greatest potential of development, and certainly has garnered the attention (as well as the E&P dollars) of offshore oil production industry leaders. By yearend 2003, the MMS estimates as much as 63 percent of the oil production and 29 percent of the daily gas production will come from deepwater reserves. In August of 1998 there were 30 (temporary and permanent) deepwater rigs drilling simultaneously in the Gulf of Mexico's Outer Continental Shelf (OCS), at depths greater than this. The proliferation of deepwater development projects will likely continue to grow…