E&P independent McMoRan Oil & Gas Corp. has contracted Rowan's Gorilla IV jack-up rig to re-enter and deepen the "ultra-deep" Blackbeard No. 1 wildcat, perhaps the most closely watched exploration well on the globe until ExxonMobil and its partners gave up on the troublesome Gulf of Mexico well in August 2006.
The rig is now on location at South Timbalier Block 168 in 70 feet of water, and drilling operations were expected to commence. The rights to the prospect, previously drilled to 30,067 feet but temporarily abandoned prior to reaching the primary targets, were acquired by McMoRan from Newfield Exploration in August 2007, as part of a $1.1 billion property acquisition package on the U.S. Gulf's continental shelf. McMoRan, now the operator, holds a 26.8% working interest in the Blackbeard prospect, which is part of the larger Treasure Island ultra-deep play.
McMoRan owns about 450,000 gross acres associated with the play. ExxonMobil was a partner and operator in the original Blackbeard well, which took a year and a half to drill and is said to have cost up to a staggering $200 million, certainly ranking it among the most expensive wells drilled anywhere in the U.S. Gulf. In fact, the Blackbeard well cost more than McMoRan's entire 2008 capital expenditure budget.
Last October McMoRan said it intended to use a beefed up drilling rig to re-enter and deepen Blackbeard, explaining then that the original rig, Rowan's Tarzan-class Scooter Yeargain, was capable of going deeper than 30,000 feet but lacked a suitable tree and blowout preventer, one of the reasons why the well was abandoned. The company said it intended to strengthen the surface blowout preventer stacks before re-drilling.
The Gorilla IV, a member of Rowan's premium jack-up fleet, was designed by LeTourneau Class 200-C Gorilla and delivered in 1986 built by Marathon LeTourneau at the Vicksburg, Mississippi shipyard. It can operate at water depths up to 450 feet and presumably can drill down in excess of 30,000 feet.
Rowan recently announced it has entered into a multi-well contract with McMoRan that includes re-entering the Blackbeard prospect. The Gorilla IV was committed for a minimum of 90 days, and work on Blackbeard is priced at a day rate over $190,000.
Meanwhile, Rowan’s Super Gorilla class jack-up Bob Palmer was undergoing final preparations for its initial assignment on BP's Eldorado prospect, also located in the Gulf of Mexico. The rig will be drilling one or more wells targeting a depth of at least 28,000 feet, Rowan said.
"These commitments both reaffirm the demand for ultra-deep gas drilling in the Gulf of Mexico and help to dispel a common misconception outside this industry that a rig is just a rig," said Danny McNease, Rowan's chief executive officer. "Rowan has throughout its history prided itself on the quality of its assets, and we will continue to invest in equipment of the highest capability, maximizing both marketability and opportunities for meaningful shareholder returns."
The original Blackbeard exploration well attracted worldwide interest, no doubt because of its targets ranging downhole to 38,000 feet, just shy of the world record of around 40,000 feet, established years ago by Russian scientists studying the world's geological depths. While exploration at Blackbeard thus far has turned up only a thin lawyer of gas, a major discovery farther down could dramatically alter the production dynamics of the shelf, which has been in decline for years.
