Elko: Luna Spud Date Anticipated Early December

- Elko: Luna Spud Date Anticipated Early December

Thursday, September 08, 2011
Elko Energy Inc.

Elko announced on May 4, 2011, that the Luna well will be drilled by the Maersk Resolve jack up drilling unit. The rig had been secured by Norwegian Energy Company ASA ("Noreco"), the license operator, under a letter of intent. At that time the rig was expected to be available in mid August 2011 and Elko subsequently announced on June 22, 2011 that the rig was anticipated to arrive at the Luna location in the second half of September 2011. Elko has been now advised by Noreco that the rig has been further delayed and the Luna spud date is now anticipated to be in early December 2011. The Maersk Resolve is currently drilling on contract to Maersk Oil and Gas in Denmark and as such the delays are out of the control of Noreco.

As previously announced, the 01/11 partners intend the Luna well to test the overall Rotliegendes play concept. The Luna prospect is located in a small half graben with the pinch out edge to the south east of the structure. The Rotliegendes reservoir is thought to have a high probability of being present at this location based on the seismic interpretation. Uncertainty still exists however on which seismic event represents the top reservoir and where the pinch out occurs.

In addition to the uncertainty on the pinch out position, there is a possibility that the Rotliegendes does not, in fact, pinch out but continues up dip into Lead A. It is therefore possible that Luna and Lead A are connected and represent one feature. The current well location which targets the Luna prospect was picked in order to maximize the information gathered by the well and is designed to address this uncertainty. The Luna drilling program is expected to take about one month in duration.

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Gauging the Gulf: Anticipated Production Declines

Gauging the Gulf: Anticipated Production Declines

Monday, March 28, 2011
Rigzone Staf
by  Trey Cowan

As of the most recent data provided by the EIA (October 2010), crude oil production coming from the Gulf of Mexico makes up approximately 29% of total U.S. daily production. We would note that this is a drop from the month of May when the Gulf contributed to 31% of all crude production.

In the U.S. Energy Information Administration's July Short-term Energy Outlook, the EIA projected that the moratorium would result in lost production of approximately 82,000 bbl/d on average during 2011 or a cumulative 30 million barrels.

Given how early in the game it was when the government made these projections, we doubt they fully considered how slowly the permitting process would resume once they rescinded the moratorium. Using average decline rates, taking the slow resumption into account, we believe the average lost production in 2011 will approximate 95,700 bbl/d or 35 million barrels in total.

The chart above illustrates that after the hurricanes of 2004 & 2005, it took several years to regain production crippled by the storms. The years 2009 and 2010 benefit from projects started in the previous six years that resulted in Gulf of Mexico production exceeding the prior peak set early in the decade.

The impact from suppressed drilling in the Gulf of Mexico over the next two years will be mitigated by operators exploiting horizontal drilling for oil in regions like the Bakken and Eagle Ford shale. This boost in the lower 48, along with the anticipated declines in production from the gulf, suggests the percentage of production from offshore sources will drop. We are anticipating that the Gulf of Mexico's annual contribution will drop from 30% to approximately 26% in U.S. supplies over the next two years.