BHP Billiton looks to have drilled the second well of its closely watched Caribbean exploration program without hitting a big oil discovery, quietly moving its drill rig from the Burrokeet site off Trinidad and Tobago to the US Gulf of Mexico.
It increases the likelihood that the resources giant’s oil growth ambitions will be pursued through acquisitions.
After a recent worldwide exploration review, BHP is targeting big frontier oil discoveries of more than 250 million barrels off Trinidad and Tobago and in the Gulf of Mexico, with plans to drill six to eight wells in the next three years.
Its 2016-17 oil exploration budget for conventional oil is $US700 million ($973m).
At Trinidad and Tobago, which is the exploration site with the most potential to produce oil quickly, the company has been generating excitement by targeting deepwater finds with the potential to become five-billion-barrel systems.
But the company’s drill ship, the Deepwater Invictus, has moved off the Burrokeet site, northeast of Trinidad and Tobago, after drilling there without any declaration of a discovery. BHP confirmed the Deepwater Invictus was powering its way to the US Gulf of Mexico to drill the Wildling appraisal well near the Caicos discovery, which was announced in October.
“BHP Billiton has concluded phase one of its Trinidad and Tobago deepwater drilling campaign,” a spokeswoman said.
“Results of the Burrokeet well are currently being evaluated and are expected to be reported in the upcoming operational review.”
BHP is due to report its December quarter results on January 25.
While BHP gave no indication of the well results, the lack of an announcement indicates no discovery has been made.
The first well in the two-well first phase, called LeClerc and south of Trinidad and Tobago, also did not result in a big discovery. But BHP put out an announcement saying it had made a gas discovery and that there were promising indications that more oil could be found.
LeClerc and Burrokeet were testing two different oil plays.
In an October briefing, BHP petroleum exploration head Niall McCormack said there was multi-billion-barrel oil potential at Trinidad and Tobago.
But he said failure to make a discovery at Burrokeet, which is a test of the Palaeogene play, would not be terminal.
“We are testing new plays in the deepwater Caribbean over 100km away from the closest well control,” Mr McCormack said. “Historically, these types of areas take more than one well to prove the presence of tier-one (discoveries).”
He said the results at LeClerc and Burrokeet would be integrated into analysis for phase two, which was expected to start in the second half of 2017.
But he also warned that further exploration would only continue if the initial results supported this. He said they had at LeClerc.
“The liquids in the deep and the oil shows that what we found were incredibly important … and have given us the encouragement from a phase two perspective,” he said.
Two weeks after the briefing, BHP revealed what appeared to be problems at the Burrokeet well, which was started on August 10.
It said the original well had been suspended and was waiting to be plugged and abandoned. Drilling started at Burrokeet-2 on August 18 and was continuing.
The Wildling appraisal well had been scheduled to start in November, so is now running a couple of months behind.
Wildling is being drilled after the Caicos well, 160km south of the Louisiana coast, discovered oil in multiple horizons.
BHP chief executive Andrew Mackenzie has said he wants to boost the company’s exposure to offshore conventional oil, as opposed to the shale oil it has heavily invested in for little return.
BHP spent $US20 billion on shale acquisitions in 2011 and nearly as much again investing in them. Mr Mackenzie has said he wants to quickly test the company’s exploration prospects as a priority over acquisitions.
Last month, BHP struck a farm-in deal on the 485-million-barrel Trion discovery with Mexico’s national oil company Pemex.
BHP will pay $US52m cash and spend $US320m over three years on the Gulf of Mexico discovery, with the aim of proving up an oil project that could deliver 120,000 barrels a day of oil by 2022, with BHP owning a 60 per cent share.
Source/Matt Chambers – The Australian