[DantesPeak]

Good technical story about the Lower Tertiary discovery. although it contains many optimistic comments:

$this->bbcode_second_pass_quote('', 'D')espite numerous discoveries and positive results from the long-awaited Jack production test, the Lower Tertiary remains fraught with risks, including huge salt dooms that cover much of the trend and can make imaging targets below the salt difficult. Moreover, because of the challenging environment associated with the deepwater, it no doubt will require billions of dollars in investment for the infrastructure to support the drilling, production and transportation of the oil to market. The wells alone will cost $80 million to $120 million a pop, according to Devon’s Hadden, who said owners of the Lower Tertiary discoveries Devon is involved with are weighing development options that could result in the U.S. Gulf’s first FPSO, or floating production, storage and offloading system.

And while industry thus far has posted some mouth-watering discoveries vs. dusters, the record is by no means perfect. Of the 19 exploratory wells drilled by various companies along the trend to date, 12 have resulted in potential commercial discoveries and eight were declared non-commercial, still a solid batting average of .630 on anybody’s scorecard.

[PeakOiler]

$this->bbcode_second_pass_quote('DantesPeak', 'I') only found out yesterday that, in addition to the 6.0 earthquake in the eastern/central GOM, there was a 5.2 earthquake within the Lower Tertiary area earlier this year. From what I understand here, the Jack #2 test was conducted after the earthquake, although I have not seen anything anywhere that states so. In fact, I haven't seen any comments anywhere concerning actual or possible earthquakes in the Lower Tertiary from the energy companies. Has the threat just been ignored by them? Does anyone know?

[EndOfSewers]

The Richter scale is logarithmic. Level 6 is not just twice as big as level 3, and I doubt it could be caused by a non-nukular blast.

[DantesPeak]

$this->bbcode_second_pass_quote('', 'C')hevron Could Avoid Huge Royalties on New Field

WASHINGTON, Sept. 11 — A group of oil companies led by Chevron, which said last week that they had discovered a huge new oil field in the Gulf of Mexico, could avoid more than $1 billion in royalty payments to the federal government for the oil.

The potential bonus to Chevron and its partners stems from a mistake the Interior Department made in signing offshore leases in the late 1990’s for drilling in federal waters. The magnitude of the oil discovery — estimated in a range of 3 billion to 15 billion barrels — is likely to intensify a battle in Congress over incentives for drilling in publicly owned waters.

Under pressure from lawmakers, Chevron and other big producers have said that they would renegotiate their leases. But they have not said how much they are willing to give up, and the Interior Department has virtually no bargaining power under current law.

[joewp]

$this->bbcode_second_pass_quote('', 'T')he potential bonus to Chevron and its partners stems from a mistake the Interior Department made in signing offshore leases in the late 1990’s for drilling in federal waters.

[DantesPeak]

$this->bbcode_second_pass_quote('joewp', '')$this->bbcode_second_pass_quote('', 'T')he potential bonus to Chevron and its partners stems from a mistake the Interior Department made in signing offshore leases in the late 1990’s for drilling in federal waters.

[nth]

If you make billions of dollars for the government, then I am sure they may give you a break once in awhile.

How can you expect a $1b tax break when you don't pay so much taxes?

[nth]

$this->bbcode_second_pass_quote('DantesPeak', '
')
I'm not sure that it was 'mistake'. While I'm not an expert or industry insider on this matter, it appears that - in general - the DOE has somehow reduced the overall oil royalties it had been getting. Only a few years ago, royalties were higher.

In addition, those oil royalties were a signficant contribution the growth of the SPR. This year, the DOE has just sold off the oil it collected through royalties and not increased the SPR.

[Revi]

That tax break must have been enormous, because it costs over 30x as much to extract oil from super deep water than shallow wells. Check out this article from Whisky and Gunpowder:

http://www.whiskeyandgunpowder.com/Arch ... 60912.html

Scary, eh?

[Bleep]

$this->bbcode_second_pass_quote('', '[')url=http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2006-09-18T100827Z_01_L18687678_RTRIDST_0_ENERGY-STATOIL-PXP-UPDATE-2.XML&rpc=66&type=qcna]Statoil to pay $700 mln for Mexico Gulf assets (link)[/url]
"We don't disclose the size of production from this acquisition but our goal is that Gulf of Mexico will contribute 100,000 barrels of oil per day after 2012," Rannveig Stangeland, public affairs manager at Statoil, told Reuters.

"This acquisition is important to achieving that target," she said. Statoil is well placed to take advantage of Gulf of Mexico fields with its deepwater expertise gained from its core activities on the Norwegian Continental Shelf, officials say.

[Heineken]

$this->bbcode_second_pass_quote('armegeddon', 'B')ush, " condi, didnt you use to work for chevron ? "
condi, " yes, of course i did "
Bush, " well, get on the phone and call your people and tell them we need something big, like a giant oil discovery, because the elections are coming up, and we need to ease the energy tension so them damn dems cant use energy against us "
condi, " good idea georgy porjy, you are so smart "

[mekrob]

$this->bbcode_second_pass_quote('', 'O')ne thing I'll say about this dreadful Bush Era: It's a lot more blatant and transparent than past US political regimes. No special interpretation needed; one can see straight through the Bush junta.

And that's what's really scary. They've concluded they no longer need to be subtle, nor want to.

[DantesPeak]

$this->bbcode_second_pass_quote('Bleep', '')$this->bbcode_second_pass_quote('', '[')url=http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2006-09-18T100827Z_01_L18687678_RTRIDST_0_ENERGY-STATOIL-PXP-UPDATE-2.XML&rpc=66&type=qcna]Statoil to pay $700 mln for Mexico Gulf assets (link)[/url]
"We don't disclose the size of production from this acquisition but our goal is that Gulf of Mexico will contribute 100,000 barrels of oil per day after 2012," Rannveig Stangeland, public affairs manager at Statoil, told Reuters.

"This acquisition is important to achieving that target," she said. Statoil is well placed to take advantage of Gulf of Mexico fields with its deepwater expertise gained from its core activities on the Norwegian Continental Shelf, officials say.

[DantesPeak]

Jack will be viable, someday.

$this->bbcode_second_pass_quote('', 'F')ortune
October 2, 2006
Volume 154; Issue 7
Section: Street Life

The Gusher Paradox

Andy Serwer

A new oil discovery is great for the drillers--but may be bad for us.

THE RECENT discovery of a massive oilfield under the Gulf of Mexico appears to be a godsend for our crude-hungry country. It's not that simple, however. The new deep-water find is a pointed example of the way elevated oil and gas prices always seem to lead us to new technologies and, eventually, to renewed supplies. But one giant new gusher does nothing to get us off the gerbil wheel of ever more consumption creating ever more demand.

...

The "Jack prospect" appears to validate the aggressive growth strategy of Devon's chairman, CEO, and co-founder J. Larry Nichols. For 35 years, he has focused on opportunistic acquisitions and ambitious drilling projects in the Gulf of Mexico. "We're smiling, but we aren't celebrating yet," Nichols, 64, told me the other day. "We still need to spend a considerable sum of money and solve some technological issues. It will take years." Nichols couldn't even begin to tell me what the cost per barrel would be, but he insists that the project will be viable.

...

Just how big is the field? "Of course this discovery was great news for Devon," says Fadel Gheit, veteran Oppenheimer oil analyst. "But all we know now is that Devon has a fish on the line. Is it 500 pounds or five pounds? It's too early to tell."

I happen to be reading Matthew Simmons's Twilight in the Desert, which describes how Saudi Arabia in particular and the world in general are running out of oil. This "peak theory" of oil (as in, the world has achieved peak production) would seem to be off base with the discovery of a 15 billion--barrel oilfield. And, as Nichols points out, oil alarmists have been sounding the same bell for decades.

[mekrob]

$this->bbcode_second_pass_quote('', 'A')nd, as Nichols points out, oil alarmists have been sounding the same bell for decades.

[nth]

$this->bbcode_second_pass_quote('mekrob', '')$this->bbcode_second_pass_quote('', 'A')nd, as Nichols points out, oil alarmists have been sounding the same bell for decades.

[DantesPeak]

Work on 'Jack' won't resume until next July:

$this->bbcode_second_pass_quote('', 'D')ec. 20 (Bloomberg) -- Bill Thornburg, a senior drill-site manager for Chevron Corp., opens a steel door on a floating oil rig off the Louisiana coast and stops dead in his tracks.

Red plastic tape warns that crews are hauling pipe and wrenches the size of baseball bats across a deck slick with sea spray. If it were up to Thornburg, there'd be a dozen more $1- million-a-day rigs plying the Gulf of Mexico, full of roughnecks so busy their bosses would need to stay out of the way.

He'll have to wait. A global shortage of deep-sea drilling rigs is costing Chevron precious time as it taps the Gulf, and the equipment deficit may keep oil prices high. A prime example is the $3 billion field dubbed Jack. Chevron and partner Devon Energy Corp. announced the deepest-ever well test there on Sept. 5. Politicians backing energy independence exulted. Investors sent Devon shares up 12 percent and Chevron's up 2.3 percent.

They didn't know the drilling rig Cajun Express had already plugged the Jack well and moved to another urgent job. Drilling at Jack won't resume until at least July, Thornburg says.

Jack will take about nine years to develop from discovery to first production, compared with six years for Tahiti, according to estimates by San Ramon, California-based Chevron, the second- biggest U.S. oil company. That's because rigs are harder to come by and it takes longer to drill deeper wells, Thornburg says.

[nth]

Chevron has signed a contract with TransOcean for a new drilling ship.
Discoverer Clear Leader which will commence drilling in 2009 in GoM. My guess is this is the ship for this field. This ship will be able to do the same amount of work as two ships, so major advances.

Meanwhile, it has extended contracts for two ships:
Cajun Express, which is working on Taihiti field. This is the ship that drilled Jack.
Discoverer Deep Seas, which is working on Taihiti field.

They also have Ensco 7500, which is working on Blind Faith.
Ensco 7500 is the wild card. I have no idea where this ship will go in the future.

[nth]

Okay, got more info:

A ship that is currently getting fixed in Singapore will be here in Summer to drill in Jack Field.

Jack Field with Cascade, Chinook, St Malo are estimated to have 3 billion barrels(probable not proven). It is possible to include other satellite areas and get over 15 billion barrels in the Walker Ridge area.

So far two wells been drilled in Jack Field. First one is to find oil. Second one is to test ability to recover oil. Walker Ridge area is exploiting the tertiary layer and this area has proven to be technicly difficult to have high flow as tested by two nearby fields:
Cascade and Chinook. Since Jack #2 proved to have high flow rates of 6kbpd, Chevron (the operator of Jack field) has faith that they will be able to get lots of oil from here.

Another reason for high faith that so much oil reside in this area has to do with St Malo discovery(450 feet of net pay). St Malo is close to Jack and will be developed together when the go ahead is given.

Going into more details on the two fields near Jack and St Malo:
Cascade and Chinook are operated by Brazil's PetroBras. They are hoping for 2009 first production. They will use two FPSO, one for each field. (First time US using FPSO.) This will be the first time Walker Ridge will go into oil and gas production. They will be the first to experience any challenges.

Cascade discovery happened in 2002. They discovered 450 net feet of pay and was followed by two delineation wells in 2005. The two wells discovered 200 net feet and 500 net feet of pay.

I cannot find any data on estimated production numbers. But first production for Cascade is only 7kbpd!

Looking forward, we should see more discoveries in 2007 in the Lower Tertiary in the Garden Banks area as there are quite a few ships there drilling. Keatley Canyon may also hold some promise.