Pioneer Sanctions Development of Devils Tower Field, Updates Deepwater Activity

abarrelfullabarrelfull wrote on 05 May 2014 12:50
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June 20, 2001

Pioneer Natural Resources Company ("Pioneer") (NYSE:PXD) (TSE:PXD) along with its partner, Dominion Exploration and Production, Inc. (“Dominion”), a subsidiary of Dominion (NYSE:D), today announced that they have sanctioned the development of the Devils Tower field in the deepwater Gulf of Mexico. Oil production is scheduled to begin in 2003 and is expected to increase to 8,000 to 10,000 barrels per day net to Pioneer. Oil equivalent reserves are estimated to be 50 to 75 million barrels. Pioneer has a 25% working interest in the field and Dominion operates the field and has a 75% working interest.

Scott D. Sheffield, Chairman and CEO, stated, “Devils Tower is the third of a trio of significant Pioneer projects sanctioned for first production in 2002 and 2003. The production profile expected from Devils Tower and the previously announced Canyon Express and Sable projects establishes Pioneer as a leader in growth through exploration.”

The Devils Tower field is located 140 miles southeast of New Orleans in 5,610 feet of water in Mississippi Canyon (“MC”) 773. The field will be developed using a truss spar with slots for eight dry tree wells and the flexibility to accommodate future subsea tie-backs. SparTec, Inc., a division of J. Ray McDermott, has been contracted to provide the spar that will be the eighth production spar in the Gulf of Mexico. At this water depth, the spar will be the world's deepest dry tree platform.

Two development wells at Devils Tower have just been completed with the MC 773 #4 well penetrating approximately 350 feet of net pay in five sands within a previously untested fault block. The MC 773 #5 and #5 sidetrack extended the hydrocarbon column in six previously penetrated sands and contained over 400 feet of net pay. Both wells will be temporarily abandoned and completed as producers upon installation of the spar.

Other Deepwater Gulf Activity

Development drilling has also been recently completed at Pioneer's Aconcagua and Camden Hills fields in MC 305 and MC 348, respectively. These fields are part of the TotalFinaElf-operated Canyon Express Project. At Aconcagua, the MC 305 #3 well was drilled to a total depth of 13,150 feet measured depth and encountered over 130 feet of net gas pay in three zones, exceeding expectations as previously announced. In the Camden Hills field, the MC 348 #1 sidetrack was drilled to 15,050 feet measured depth and encountered over 80 net feet of gas pay in two zones.

Canyon Express facility construction and installation is currently on schedule for first gas production in mid-2002. The project has the capacity to deliver 500 million cubic feet of gas per day and is the largest development project currently underway to deliver gas to the North American market in 2002. Production from Pioneer's 18% interest in Canyon Express is expected to increase its North American gas production by approximately 30%.

Pioneer also announced the results of appraisal drilling on two recently announced discoveries. A sidetrack drilled on the Falcon discovery in East Breaks 579 was successful, and detailed geologic, reservoir and economic evaluations required for project sanction should be completed during the third quarter. A sidetrack drilled to appraise the Turnberry discovery in Atwater Valley 92 found two hydrocarbon-bearing sands updip of the over 100 feet of net pay in the discovery well, but the pay was much thinner than anticipated. Results of the Turnberry appraisal well are currently being evaluated; however, the well did not prove up sufficient reserves to establish economic feasibility at this time.

Pioneer expects to spud its first operated deepwater Gulf of Mexico well in early July. The well will be drilled in East Breaks 981 on the Argo prospect (formerly known as Sanibel). Pioneer will have a 75% working interest in the prospect and Mariner Energy, Inc. will have the remaining 25%.


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