ConocoPhillips pulls brakes on Gulf of Mexico drilling

After striking dust at its Melmar offshore exploration well in the Gulf of Mexico, ConocoPhillips is pulling the brake on its drilling plans in the area.

The well had been drilled using the Maersk Valiant drillship, owned by the Danish drilling contractor Maersk Drilling. After failing to find commercial volumes of hydrocarbons, the Melmar well was plugged and abandoned.

Back in 2015, ConocoPhillips had said it would drill one or two more wells using the Maersk Valiant, however, according to a conference call on Thursday, this is no longer the case, as the company is looking to save money.

Alan J. Hirshberg, the company’s EVP Production, Drilling and Projects, said the company would not drill the Horus or Socorro wells in the Gulf of Mexico, as “we don’t feel it’s prudent to continue allocating capital to new deepwater prospects.”

To remind, ConocoPhillips on Thursday said capex for 2016 would be reduced from $6.4 billion to $5.7 billion. Approximately half of this reduction, comes from the decision not to press ahead with the two Gulf of Mexico wells.

As for the Maersk Valiant, it’s unclear what the ConocoPhillips’ decisions means for the drilling contract.

When contacted by Offshore Energy Today, a Maersk Drilling spokesperson said:“The Maersk Valiant is on a joint contract with ConocoPhillips and Marathon Oil until September 2017.” In addition the spokesperson said there have been no changes to the contract.

Hirshberg said ConocoPhillips was involved in the Gibson well, which is “currently drilling,” and “that’s the last well we plan to drill in the deepwater Gulf of Mexico.”

The Gibson well, located in the Keathley Canyon area of the Gulf of Mexico, is operated by Chevron, with ConocoPhillips and BP acting as partners.

Deepwater cuts

The latest move by ConocoPhillips is a continuation of the company’s mid-2015 strategy, when it said it would scale down its deepwater exploration spending. On that note, the company in July 2015 terminated its contract for the Ensco DS-9 deepwater drillship.

The DS-9 had been scheduled for delivery to the Gulf of Mexico in late 2015 to begin drilling the company’s operated deepwater inventory on a three-year contract. However, this never happened, and ConocoPhillips paid $400 million for the contract termination.