Kerr-McGee to use a Truss Spar for Constitution Development

The Board of Directors of Kerr-McGee has approved the development of its 100%-owned Constitution field utilizing a truss spar facility. Located in the Gulf of Mexico in 5,000 feet of water at Green Canyon blocks 679 and 680, the Constitution field has estimated proven and probable resources of approximately 110 million barrels of oil equivalent. The total project costs, including $125 million spent to date on leases and drilling, will be approximately $600 million.

"Constitution is the next milestone in our successful deepwater exploration and development program," said Luke R. Corbett, Kerr-McGee chairman and chief executive officer. "Kerr-McGee has once again demonstrated its ability to add value through the drill bit at reasonable costs, utilizing proven development solutions. A stand-alone facility at Constitution enables us to dramatically accelerate the development timetable for this significant field, therefore enhancing shareholder value. In addition, this spar will create our sixth deepwater hub, enabling us to further capitalize on our extensive acreage inventory in the Gulf of Mexico."

The Constitution field was confirmed by 11 penetrations into predominantly oil-bearing sands in seven hydrocarbon-bearing reservoirs. These high-quality reservoirs have an average porosity of 28%, permeability of approximately 800 millidarcies and oil gravity of approximately 32 degrees API. The Pliocene reservoirs are located at depths from 12,500 feet to 15,000 feet.

"The extensive appraisal program and evaluation process, combined with our deepwater Gulf of Mexico experience, reinforce our resource estimates and provide a strong foundation for the productivity of this field," said Dave Hager, Kerr-McGee senior vice president responsible for oil and gas exploration and production. "In addition, Ryder Scott has reviewed the geoscience and engineering data and verified our approach to the assessment of the reserves for Constitution."

The Constitution field will be developed with a truss spar similar in design to Kerr-McGee's previous three truss spars. Like the Nansen, Boomvang and Gunnison spars, the Constitution spar will have capacity to process 40,000 barrels of oil per day (b/d) and 200 million cubic feet of gas per day (MMcf/d). The hull will be 98 feet in diameter and approximately 550 feet long. It will be built by Technip at its Pori, Finland yard, where the hulls for Kerr-McGee's Neptune, Nansen, Boomvang and Gunnison spars were fabricated.

"Our experience in the design, construction and installation of truss spars will enable us to realize savings of both time and costs on the Constitution project," said Hager. "In addition, by using similar facility designs, we expect to realize ongoing operating efficiencies." The development plan for the Constitution field includes five dry trees and one subsea tieback. Well bores from previously drilled appraisal wells will be used as part of the final development plan. First production is expected by mid-2006, with peak production expected to reach 40,000 b/d and 75 MMcf/d in 2007.