Freeport-McMoRan 2014 Annual Report Download - page 58

MANAGEMENT’S DISCUSSION AND ANALYSIS
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day and 450 MMcf of natural gas per day. The Lucius field was
discovered in November 2009, and the subsequent development
project was sanctioned in late 2011. FM O&G has a 25.1 percent
working interest in Lucius.
During fourth-quarter 2014, installation operations for flow
lines, export lines and suction piles for Heidelberg’s mooring
system commenced. Fabrication of the main topsides module is
more than 70 percent complete. The Heidelberg truss spar was
designed as a Lucius-look-alike facility with capacity of 80 MBbls
of oil per day. Development drilling is in progress and the project
remains on track for first production in 2016. Heidelberg is a large,
high-quality oil development project located in 5,300 feet of water
in the Green Canyon area. FM O&G has a 12.5 percent working
interest in Heidelberg.
In December 2014, FM O&G announced successful results from
the 100-percent-owned Holstein Deep delineation well in the
Green Canyon area. The well, which is approximately one mile
south of the discovery well, was drilled to a total depth of 31,100
feet, and wireline logs and core data confirmed 234 net feet of
Miocene oil pay with excellent reservoir characteristics and good
correlation to the discovery well and previous confirmation
sidetrack penetration.
In December 2014, FM O&G commenced drilling the second
delineation well at Holstein Deep. The well, which is updip to the
discovery well, is currently drilling below 24,800 feet toward a
proposed total depth of 31,500 feet. Production from the planned
three-well development program is expected to reach
approximately 15 MBOE per day. The timing of tying in this
production will be subject to partner arrangements and general
market conditions.
Recent data supports the potential for additional development
opportunities at Holstein Deep to achieve production of up to
75 MBOE per day by 2020. The Holstein Deep development is
located in Green Canyon Block 643, west of the Holstein platform
in 3,890 feet of water. FM O&G has identified multiple additional
development opportunities in the Green Canyon area that could be
tied back to the Holstein facility.
Marlin, in which FM O&G has a 100 percent working interest,
is located in Viosca Knoll and has production facilities capable of
producing in excess of 90 MBOE per day. Several tieback
opportunities in the area have been identified including the Dorado
and King development projects.
In December 2014, FM O&G announced positive drilling results
from the 100-percent-owned Dorado development project. This
well is the first of three planned subsea tieback wells to the Marlin
facility targeting undrained fault blocks and updip resource
potential south of the Marlin facility. The well is expected to
commence production in second-quarter 2015. Drilling operations
for the second and third wells are expected to begin in the second
half of 2015. The Dorado development is located on Viosca Knoll
Block 915 in 3,860 feet of water.
FM O&G commenced drilling at the 100-percent-owned King
prospect in late 2014, and the well was drilled to a true vertical
depth of 12,250 feet in January 2015. Log results indicated 71 net
feet of gas pay, and FM O&G is preparing a downdip sidetrack to
pursue an optimum oil take point below the gas-oil contact in
the reservoir. King is located in Mississippi Canyon, south of the
Marlin facility, in 5,200 feet of water.
Horn Mountain, in which FM O&G has a 100 percent working
interest, is located in Mississippi Canyon and has production
facilities capable of producing in excess of 80 MBOE per day.
Several tieback opportunities in the area have been identified,
including Kilo/Oscar/Quebec/Victory (KOQV), which are expected
to commence in mid-2015. This infill drilling program will target
undrained fault blocks and updip resource potential just east of
the Horn Mountain facility. KOQV is located in approximately
5,500 feet of water.
In December 2014, the Power Nap exploration well in the Vito
area encountered positive drilling results. The well was drilled to a
total depth of 30,970 feet, and wireline logs and core data indicated
that the well encountered hydrocarbons in multiple subsalt Miocene
sand packages. The operator is preparing to drill a sidetrack
well to delineate the reservoir and test the downdip limit of the oil
accumulation. Power Nap, in which FM O&G has a 50 percent
working interest, is located in 4,200 feet of water and is operated by
Shell Offshore Inc., which has a 50 percent working interest.
FM O&G has an 18.67 percent interest in the Vito oil discovery
in the Mississippi Canyon area and a significant lease position in
the Vito basin in the Mississippi Canyon and Atwater Valley areas.
Vito, a large, deep subsalt Miocene oil discovery made in 2009,
is located in approximately 4,000 feet of water and is operated by
Shell Offshore Inc. Exploration and appraisal drilling in recent
years confirmed a significant resource in high-quality, subsalt
Miocene sands. Development options are under evaluation.
Inboard Lower Tertiary/Cretaceous. FM O&G has an industry-
leading position in the emerging Inboard Lower Tertiary/
Cretaceous natural gas trend, located on the Shelf of the GOM and
onshore in South Louisiana. FM O&G believes that data from
eight wells drilled to date indicate the presence of geologic
formations that are analogous to productive formations in the
Deepwater GOM and onshore in the Gulf Coast region.
In February 2015, we announced the results of additional
production testing on FM O&G’s Highlander discovery, located
onshore in South Louisiana in the Inboard Lower Tertiary/
Cretaceous trend. The production test, which was performed in
the Cretaceous/Tuscaloosa section, utilized expanded testing
equipment and indicated a flow rate of approximately 75 MMcf/d,
approximately 37 MMcf/d net to FM O&G, on a 42/64th choke
with flowing tubing pressure of 10,300 pounds per square inch.
Highlander began production on February 25, 2015, using FM O&G
facilities in the immediate area. FM O&G plans to install additional
amine processing facilities to accommodate the higher rates.