• 14 hours Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 15 hours Oil Gains Spur Growth In Canada’s Oil Cities
  • 15 hours China To Take 5% Of Rosneft’s Output In New Deal
  • 16 hours UAE Oil Giant Seeks Partnership For Possible IPO
  • 17 hours Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 17 hours VW Fails To Secure Critical Commodity For EVs
  • 18 hours Enbridge Pipeline Expansion Finally Approved
  • 19 hours Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 20 hours OPEC Oil Deal Compliance Falls To 86%
  • 1 day U.S. Oil Production To Increase in November As Rig Count Falls
  • 2 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 2 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 2 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 2 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 2 days Aramco Says No Plans To Shelve IPO
  • 4 days Trump Passes Iran Nuclear Deal Back to Congress
  • 4 days Texas Shutters More Coal-Fired Plants
  • 5 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 5 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 5 days Chevron Quits Australian Deepwater Oil Exploration
  • 5 days Europe Braces For End Of Iran Nuclear Deal
  • 5 days Renewable Energy Startup Powering Native American Protest Camp
  • 5 days Husky Energy Set To Restart Pipeline
  • 6 days Russia, Morocco Sign String Of Energy And Military Deals
  • 6 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 6 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 6 days India Needs Help To Boost Oil Production
  • 6 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 6 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 6 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 6 days District Judge Rules Dakota Access Can Continue Operating
  • 7 days Surprise Oil Inventory Build Shocks Markets
  • 7 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 7 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 7 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 7 days Oil M&A Deals Set To Rise
  • 7 days South Sudan Tightens Oil Industry Security
  • 7 days Over 1 Million Bpd Remain Offline In Gulf Of Mexico
  • 8 days Turkmenistan To Spend $93-Billion On Oil And Gas Sector
  • 8 days Indian Hydrocarbon Projects Get $300 Billion Boost Over 10 Years

Marathon Abandons $270 Million Ultra-Deepwater Project

Marathon Abandons $270 Million Ultra-Deepwater Project

Marathon Oil announced on December 2 its decision to abandon a key deep-water oil project in the Gulf of Mexico.

The well that Marathon had been drilling had already caused the company some problems. Drilling the well took seven months, and mechanical problems delayed the project’s completion. Marathon said last week that upon completing the project, drilled at 34,600 feet, that it had plugged the well and released its rig. Marathon says that it has no further plans for the block.

The deal was a blow for the company that had already announced plans to abandon some offshore drilling assets in an effort to correct its balance sheet. The dry hole that Marathon drilled probably cost the company around $270 million. Meanwhile, Marathon became one of the largest companies to have announced a cut its dividend in the past quarter. Its upcoming payout will drop to 5 cents per share from the previous 21 cents per share. Related: North America’s Best Shale Patch

But the well was also closely watched because it was located in the Lower Tertiary, an oil-bearing region located at ultra-deepwater depths that have largely been unexploited at this point. Drilling in the Lower Tertiary is technically expensive and difficult. When oil prices were in three-digit territory just a few years ago, interest in the Lower Tertiary spiked. While more expensive, the frontier region made sense when it seemed as if low-cost oil had run out. Plus, the potential oil lying deep below in the Gulf of Mexico could be vast. Marathon’s Solomon well was thought to hold somewhere on the order of 450 million barrels. Related: Central Banks Continue To Rule Equity And Commodity Markets

Marathon’s dry hole puts a chill on interest in the Lower Tertiary, although with today’s low oil prices, few companies are sanctioning new deepwater projects anyways. The latest result from the OPEC meeting likely ensures that oil prices will remain at $50 or lower for the coming months. Oil companies are increasingly deferring on drilling expensive deepwater projects like Marathon’s Solomon.

Marathon has plans to refocus its efforts on shale assets, which offer much lower upfront costs than deepwater drilling.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News