Unocal's Spirit Energy 76 drills first deepwater well in record time
Sugar Land, Texas, May 28, 1998 -- Spirit Energy 76, Unocal Corporation's Lower 48 exploration and production unit, today said that it met its aggressive target of reducing deepwater drilling costs by 50 percent on the first exploratory well it drilled in the Gulf of Mexico deepwater.
The South Sierra well, on Garden Banks block 551, recorded a drilling rate of 479 feet per day, compared with 206 feet per day for a comparable deepwater exploration well in the Garden Banks area. The well was spudded on April 6, and reached its final objective in 30 days.
Drilled in 3,674 feet of water to a total depth of 14,360 feet, the well encountered some hydrocarbons in two intervals and is currently being evaluated. At this time, it does not appear to be a commercial discovery. Unocal's working interest on the South Sierra prospect is 50 percent, and its $7.6 million share of the well costs will be charged against earnings in the second quarter of 1999.
"We are very pleased that we were able to achieve our aggressive drilling cost goals. This is especially significant given the fact that this well was the first Unocal operated well drilled in the deep water of the Gulf of Mexico," said Unocal Chairman Roger C. Beach. "We look forward to repeating and improving on this performance throughout this drilling program and we are laying a solid foundation for the arrival of the Discoverer Spirit next year."
The Discoverer Spirit is a drillship under construction that will be capable of drilling in the ultra-deep waters up to 10,000 feet of water.
"Our drilling performance on the South Sierra well shows that we can achieve higher relative returns from our deepwater portfolio by driving down costs dramatically," said John T. Donohue, president of Unocal's Spirit Energy 76 operating unit.
South Sierra is the first well drilled in a six-month drilling program using Transocean's George Richardson rig. The rig has now moved on to the Bowshock prospect on Garden Banks block 460. Spirit Energy 76 holds 100 percent of the working interest in the Bowshock prospect.
In addition, drilling on the company's Nag prospect in Mississippi Canyon block 541 began last week, using a rig slot on the Atwood Hunter rig. Spirit Energy's interest in the Nag prospect is 50 percent.
Drilling has begun on the Conoco-operated K2 prospect in Green Canyon block 562, which will bring the total number of deepwater wells in progress simultaneously to three. Spirit Energy holds a 50 percent working interest in the block.
Spirit Energy 76, Unocal's U.S. Lower 48 exploration and production unit, has major operations onshore in Texas and Louisiana and on the Gulf of Mexico shelf, in addition to a significant presence in the Gulf of Mexico deepwater.
Unocal is one of the world's largest independent oil and gas exploration and production companies, with resource development, power plant and pipeline projects in Asia, the U.S. Gulf of Mexico region and Latin America.
Forward-looking statements regarding exploration activities and drilling success in this news release are based on assumptions concerning market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially as a result of factors discussed in Unocal's 1998 Form 10-K report filed with the Securities and Exchange Commission.
Updated: May 1999