GULF OF MEXICO

BP’s Tiber is its second discovery in the Lower Tertiary. Its first, Kaskida on Keathley Canyon block 292, is approximately 50 mi (80 km) east-southeast of Tiber.

BP says it has drilled a “giant” oil discovery on the Tiber prospect in Keathley Canyon block 102 in the deepwater Gulf of Mexico. The well, in 4,132 ft (1,259 m) of water, struck oil in multiple lower tertiary reservoirs. It was drilled to 35,055 ft (10,685 m) TMD, making it the deepest well drilled ever by the oil and gas industry, according to BP. Transocean’s semisubmersibleDeepwater Horizon drilled the well.

BP says it is too early to estimate the discovery’s ultimate resource potential, but the company believes it is in the same class as its other major discoveries in the GoM, including Kaskida, which is estimated to hold 3 Bboe in place, with a projected recovery factor of 10% to 20%. Kaskida, discovered in 2006, was BP’s first major discovery in the Lower Tertiary. The field is currently under appraisal, with first production expected in 2014 at the earliest.

BP plans drill an appraisal well on Tiber to determine the size and commerciality of the field. BP operates Tiber with a 62% working interest. Co-owners are Petrobras (20%) and ConocoPhillips (18%).

Shenzi production exceeds expectations

The Shenzi field in the deepwater Gulf of Mexico has achieved sustained rates of 120,000 b/d of oil, exceeding its design capacity of 100,000 b/d, according to operator BHP Billiton Petroleum.

The field is producing 120,000 b/d from seven wells. Two additional wells are shut in and available for production as needed, the company says.

The Shenzi facility is 120 mi (195 km) off Louisiana and is installed in approximately 4,300 ft (1,300 m) of water on Green Canyon block 653. It comprises four blocks: Green Canyon 609, 610, 653, and 654. Initial field development includes seven subsea wells tied back to the TLP, with full field development expected to expand to a total of 15 producing wells and future water injection wells. Crude oil is transported via a 20-in. (51-cm) diameter pipeline connecting to Ship Shoal 332 B, while natural gas will be exported via the Cleopatra pipeline.

Lease sale results fall to 10-year low

Results from Minerals Management Service’s recent Western Gulf of Mexico Oil and Gas Lease Sale 210 were the worst in ten years, coinciding with lower E&P capex budgets, soft natural gas prices, and uncertainty over future US tax policies. Approximately 18.4 million acres, or 3,435 tracts, were offered.

Just 27 companies participated in the lease sale, down from 53 in 2008. Participant companies placed 189 bids, which is 55% less than the total number submitted in the previous year. The majority of bids were for long-term leases in deepwater. Approximately 74% of the bids were placed for blocks in water depths of 800 m (2,625 ft) or greater. Additionally, 74% of all bids placed were for lease terms of 10 years.

Total money exposed in Western GoM Lease Sale 210 fell to a level not seen since 1999. Source: MMS, Pritchard Capital Partners.

The total money exposed was $145.2 million, down 76% year-over-year. Total high bids also declined 76% from the previous year, to $115.5 million. Approximately 28% of the total was from BP’s $28.1 million bid for Keathley Canyon block 96, which is about 20 mi (32 km) west of the company’s Tiber discovery. Two of the other top five bids came from BP as well: $5.1 million for Keathley Canyon block 180 and $2.9 million for East Breaks block 875. The company also submitted the largest sum of high bids – 37, and the greatest total of high bids – $50.6 million.

The block in the deepest water depth to get a bid was Keathley Canyon block 983 in 3,220 m (10,564 ft) of water.

Other active bidders were Chevron with 26 high bids totaling $9.1 million, ConocoPhillips with 22 bids valued at $15.2 million, ExxonMobil with 17 high bids worth $8.6 million, and Focus Exploration with 15 high bids totaling $4.7 million.

MMS will evaluate the high bids for fair market value before leases are awarded.

New deepwater contracts

BP has awarded Nexans a frame agreement for deepwater umbilical projects in the Gulf of Mexico. The $300-million frame agreement is initially for one year with an optional four-year extension.

The agreement covers the design, manufacture, and supply of bespoke umbilicals that will carry fluid, power, control, and telecommunications services for new subsea oil and gas projects (or replacements) in water depths up to 1,980 m (6,496 ft).

Nexans says the agreement could bring in up to $300 million, and require the supply of more than 200 km (124 mi) of umbilical to BP.

The umbilicals will be designed and manufactured at Nexans’ facility in Halden, Norway.

Marathon Oil Co. has awarded Technip a lump sum contract for the Ozona field development in the Gulf of Mexico. The project consists of a tie-in to the Shell-operatedAuger TLP moored in 3,280 ft (1,000 m) of water on Garden Banks block 515.

The contract covers project management and surveys; engineering; procurement/fabrication and installation of a 5.6-mi (9-km) long pipe-in-pipe flowline; two PLETs; an anchor pile and a rigid jumper; and installation of a 7.5-mi (12-km) long umbilical.

Technip’s Houston office will carry out the contract. The flowline will be welded at the group’s spoolbase located in Mobile, Alabama. Offshore installation is scheduled for 2Q 2010 using the pipelay vesselDeep Blue.