Kerr McGee Announces Development Plans for Leadon Field
OKLAHOMA CITY (Sept. 12, 2000) - Kerr-McGee Corp. (NYSE: KMG) announced today that its Board of Directors approved the development plan for the Leadon field located in the U.K. sector of the North Sea. The development plan is subject to environmental review and approval by the U.K. Department of Trade and Industry (DTI). In addition, the company announced the discovery and development of the Birse and Glassel oil fields in the Greater Leadon area. These satellite fields are located about 5 miles from the Leadon field. The company now estimates reserves in the Greater Leadon area to be in the range of 120 million to 170 million barrels of oil equivalent, up from initial estimates of 70 million to 100 million barrels. The Greater Leadon fields encompass blocks 9/14a and 9/14b, which are operated by the company with 100% interest.
The Leadon, Birse and Glassel fields will be developed using subsea horizontal wells tied back to a floating production, storage and offloading (FPSO) facility. Kerr-McGee expects initial production from the Greater Leadon area in early 2002, with peak production projected at approximately 50,000 barrels of oil per day by year-end 2002.
"We believe an FPSO is the most efficient, cost-effective and reliable method of development for the Greater Leadon area," said Luke R. Corbett, Kerr-McGee chairman and chief executive officer. "The expertise gained in design, installation and operations of our Gryphon FPSO has been invaluable to the development plans for the Leadon area. We will work closely with the DTI in regards to our Leadon development and appreciate the assistance we have received from local authorities on this project." "We look forward to drilling additional exploratory prospects surrounding the Greater Leadon area and further enhancing the value of this development. Our strategy to build core operating areas has proven successful, and we remain committed to further expansion of our operations in the North Sea," Corbett said.
Kerr-McGee has reached an agreement to acquire the Mitsui F-601 hull from Mitsui Engineering & Shipbuilding Co., Ltd., of Tokyo, Japan. The topsides will be constructed by Swan Hunter (Tyneside) Ltd. in Northeast England, U.K., with detailed engineering provided by Brown & Root Energy Services Ltd., based in Aberdeen, Scotland. Other major contracts will be awarded over the coming months involving Scotland, U.K. and internationally-based companies. The FPSO will be christened as the Kerr-McGee Global Producer III. Development costs are estimated to range between $600 million and $700 million, depending upon ultimate field size. Kerr-McGee U.K. region headquarters in Aberdeen, Scotland, will manage the overall development effort.
Kerr-McGee is the largest U.S.-based independent operator in the North Sea, with average daily net production of approximately 133,000 barrels of oil equivalent during the first half of 2000. Kerr-McGee expects that its North Sea expenditures for 2000 will exceed $1 billion, including the North Sea oil and gas assets of Repsol S.A. acquired this year.
Kerr-McGee is an Oklahoma City-based energy and inorganic chemical company with assets of $7.2 billion.