Mad Dog on the rise
finance.news.com.au
March 24, 2005
THE value of the deepwater Mad Dog oil and gas field in the Gulf of Mexico, in which BHP Billiton holds 23.9 per cent, appears to have been substantially improved as a result of the latest appraisal drilling.
The $US1.54 billion ($1.97 billion) Mad Dog development began operating in January and is producing about 30,000 barrels of oil a day - a third of planned production.
An appraisal well and three sidetrack wells drilled on the deepwater Mad Dog Southwest Ridge had encountered significant oil, BHP Billiton said yesterday.
Each intersected up to 300ft of net oil in the early Miocene section and found hydrocarbons about 700ft deeper on the west flank of the structure than previously encountered.
"These results significantly reduce the risk associated with our previously announced reserve estimate of 200 million to 450 million barrels of oil equivalent," BHP Billiton group president for energy, Phil Aiken, said.
The new resources could be produced through development wells or future sub-sea tie-backs.
BHP Billiton officials in Melbourne said yesterday's release "basically is confirming what we already thought about the reserves. We aren't commenting or providing guidance as to whether this is at the higher end of the 200-450 million barrels oil equivalent scale".
But analysts said that because the appraisal drilling had encountered hydrocarbons in a new area of the field, it could be assumed total estimated reserves would increase.
US independent Unocal, which holds a 15.6 per cent working interest in Mad Dog, said the project was designed to process about 100,000 barrels of oil and 60 million cubic feet of gas a day in full production.
There was no public comment from BP, which is the Mad Dog operator with 60.5 per cent. Mad Dog was discovered by BP in 1999.
The appraisal program was drilled from the Discoverer Spirit drillship, which is under contract to Unocal until September.
The Mad Dog development is on the section of the field that is in 1400m of water.
Oil is transported to shore through the Cesar pipeline, which is 25 per cent owned by BHP Billiton, and connects to the major Cameron Highway Oil Pipeline, which links a number of fields in the Gulf of Mexico.
Mad Dog is BHP Billiton's first producing development in the Atwater Foldbelt of the Gulf of Mexico where it began deepwater exploration in the mid-1990s.
BHP Billiton now holds interests in more than 450 Gulf of Mexico blocks and also in the BP-operated Atlantis field, which is scheduled to come on stream next year. |
