ExxonMobil Kicks Off Deepwater Drilling at Libya Well

Libya, North Africa
(Click to Enlarge)

NEW YORK (THE WALL STREET JOURNAL via Dow Jones Newswires), Jun. 29, 2009

Exxon Mobil Corp. said it is beginning to drill the first of three deepwater exploration wells off the coast of Libya, ramping up activity in the oil-rich nation by the world's largest publicly traded oil company.

Tim Cejka, Exxon's head of exploration, said in an interview with the Wall Street Journal that the deepwater exploration program would start in the next couple days. Exxon won exploration rights in licensing rounds three years ago and was also awarded another exploration block directly by the North African government.

With about 44 billion barrels of proved oil reserves, the eighth most in the world, Libya is an enticing region for western oil companies. Exxon, based in Irving, Texas, first discovered oil there in 1960, but it left the country in 1986 when Washington prohibited U.S. oil companies from investing there. The U.S. ended its official designation of Libya as a sponsor of terrorism in 2006, reviving interest among U.S. oil companies in pursuing exploration activities there.

Exxon has courted Libya for access intensively, including a meeting between Chief Executive Rex Tillerson and leader Col. Moammar Gadhafi in the North African nation in February 2007.

The deepwater exploration marks the beginning of a new era for the North African nation. The national oil companies and western companies have extensively explored the nation's land and have found numerous fields. But its offshore waters, especially its deep waters, have only been lightly explored.

Cejka also said he wasn't ready to declare a recent deepwater well in Brazil a dry hole yet. "The fat lady hasn't sung," he said of the Guarani well drilled on the BMS-22 offshore block. The well was recently drilled to 17,800 feet - deep enough to find out - before the partners began taking a sample of the rock. The company, however, did not report to regulators that it had found evidence of oil or gas, leading some investors to assume it is a dry hole.  

Copyright (c) 2009 Dow Jones & Company, Inc.


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