Australia among the international players busy in the Gulf of Mexico.
invasion has impacted all levels of activity, both on- and offshore
in the Gulf Coast region.
dinkum" — generally defined as a true, genuine thing.
these three companies from down under: Each has taken a different
approach to its U.S. operations, yet all have been successful —
and each is positioned for future growth.
USA (known as Weeks Exploration before 1995) made its first entry
in the United States in 1988 when its Australian-based parent Santos
Ltd. acquired Peko Oil. In the beginning, Santos' U.S. operations
were a conglomeration of small, non-operated investments that had
little impact on the parent company, according to Santos' president
Santos was giving serious consideration to pulling out of the United
States, but a new managing director arrived and the decision was
left to the new management team. Fortunately for Santos USA, the
new team had other ideas.
decided to substantially grow the firm's business in the United
States," Hogenson said. "The new management felt Santos could benefit
from access to the world's largest gas market, and by late 2000
there were signs that the United States was going to face a declining
supply of natural gas and a tight supply-demand relationship.
market offers Santos high cash operating margins and very short
cycle times from discovery to production," she said.
USA took its first important step toward growth in 2002 with the
acquisition of Esenjay Exploration Inc., which had a strong portfolio
of prospects in the Frio and Wilcox trends.
the acquisition we have been drilling up the portfolio of prospects
to immediately boost production," said Bill Hogenson, Santos USA's
vice president of exploration and development.
future, Santos has established a new ventures group that since 2001
has been studying the Gulf Coast region and the Gulf of Mexico looking
for new opportunities.
taken apart the Gulf Coast and the Gulf of Mexico starting in the
Triassic through present day to develop new concepts," he said.
"We have been screening those now for two years, and we feel this
work is going to put us in some very new and different plays, but
with a continued focus on deeper, geopressured natural gas. We will
begin drilling some of our new ventures concepts late this year."
to the drill bit, Santos is looking for acquisition opportunities,
according to Ben Bates, vice president of strategic development.
Santos, why the Gulf of Mexico?
- The United States,
company officials said, offers a lower risk environment that offsets
high risk opportunities in regions such as the Middle East, Papua
New Guinea and Indonesia.
- The United States'
projects "have a strong market for our production," Bates said.
- The United States
offers relative easy entry.
- It leverages a Santos
Cooper Basin core competency: frac-stimulation.
USA plans to drill about 17 exploration, appraisal and development
wells in 2004, although that number could increase depending on
began building a balanced diversified risk and reward portfolio,
taking a significant position in a small number of areas comprising
short-term production of up to five years, medium-term production
of five to 10 years and long-term production of 10 to 15 years,
according to Rob R. Millhouse, Woodside's corporate affairs manager.
Gulf of Mexico was on the list. Woodside initially acquired interests
ranging from 12.5 to 33 percent in 43 deepwater exploration blocks
operated by Marathon Oil for $25.6 million. These blocks covered
21 identified prospects and leads.
enabled Woodside to begin building a high-quality exploration portfolio
in a world-class hydrocarbon province," Millhouse said.
the firm participated in two dry wells, acquired additional acreage
through a 6 percent interest in six Walker Ridge deepwater blocks
and, with Marathon, successfully bid on several deepwater blocks
in Mississippi Canyon and Green Canyon.
year Woodside participated in its first deepwater discovery with
a 2.75 percent interest in the Timberwolf discovery on Mississippi
Canyon block 555.
spent most of 2001 studying the Gulf of Mexico. In 2002 it participated
in four wells — three of which were dry — and farmed into the
successful Neptune acreage, operated by fellow Australian company
BHP Billiton, and participated in Neptune 3, which discovered 137
meters of gross hydrocarbons and 40 meters of net oil pay.
- Participated in the
successful Neptune 5 well, which found more than 152 meters of
net oil pay from a gross hydrocarbon column of more than 300 meters
— considered one of the best net-to-gross ratios in the Gulf
of Mexico, Millhouse said.
- Formed a joint exploration
program with Pioneer Natural Resources for a two-year deep gas
campaign in the shallow water Texas shelf region. The agreement
covered eight prospects and 19 leads and included drilling five
wells last year and three in 2004, with most targeting gas plays
below 15,000 feet.
has interests in 130 blocks in the Gulf — 82 in deepwater and 48
on the Texas shelf.
Woodside, why the Gulf of Mexico?
- A significant undiscovered
- The United States
represents the largest energy market in the world and that market
continues to grow.
- The Gulf offers rapid
life-cycle discovery to production due to the extensive infrastructure
- The United States'
low political risk and favorable fiscal regimes.
- Companies can combine
medium to long-term growth goals in the Gulf of Mexico deepwater
with near-term cash flow and production from the shelf region.
Billiton, the world's largest metals and mining company, has
been involved in the Gulf of Mexico since the early 1990s via its
petroleum group and from the beginning has focused on the elephant
hunting grounds in the deepwater.
a watershed year for the company's U.S. operations — in February
it announced initial production from its first operated deepwater
field, the Boris Field (in 2,400 feet of water in Green Canyon block
282). It came on line producing 7,500 barrels of oil per day, and
when fully developed production could reach 18,000 barrels of oil
and 27 million cubic feet of gas daily. The estimated commercial
life of the field is six to eight years.
a discovery at the Chinook prospect in ultra-deepwater (about 8,830
feet, with total subsurface depth exceeding 27,650 feet). The wildcat
encountered a gross hydrocarbon column of 620 feet with 260 feet
of net oil pay.
In a speech
last year Francis McAllister, BHP Billiton's manager of investor
relations in the Houston office, said the firm believes the deepwater
Gulf of Mexico is currently the hottest play in the global oil and
oil and gas strategy encompasses four elements, including high margin
exploration and production, which is where the Gulf of Mexico lies.
Gulf of Mexico has world-class potential, very attractive fiscal
terms and access to the United States' premium oil and gas market,"
McAllister said. "BHP Billiton's strategy was to get in early and
tie up some of the most prospective blocks at low prices."
began bidding on deepwater blocks in 1993 and at mid-year 2003 had
interests in more than 340 Gulf blocks. McAllister said the average
cost per block is $550,000, which is in the lowest quartile of acquisition
costs in the industry.