McMoRan Exploration Co. Reports on Gulf of Mexico and Gulf Coast Operations Following Hurricane Katrina
September 02 2005 - 9:02AM
Business Wire
McMoRan Exploration Co. (NYSE: MMR) reported on its Gulf of Mexico
and Gulf Coast operations following Hurricane Katrina. McMoRan's
initial assessment of its exploration and development operations,
production facilities and the Main Pass Energy Hub(TM) (MPEH(TM))
platforms indicate no apparent major damage. Production has been or
will be restored imminently on all production facilities with the
exception of oil production at Main Pass 299 which will be restored
as soon as practicable following completion of what currently
appears to be minor repairs. Prior to the storm, McMoRan's
quarter-to-date production averaged approximately 55 Million cubic
feet of natural gas equivalents per day (Mmcfe), including 2,900
barrels of oil per day (17 Mmcfe/day) for McMoRan's share of
production at Main Pass Block 299. "While our operations appear not
to have incurred major damages, Hurricane Katrina and its aftermath
have stricken our community with a disaster of almost unimaginable
proportions, brought pain to the lives of everyone in the
metropolitan New Orleans area and tragedy to the communities
throughout our region. Our thoughts and support go out to all
affected by this tragic event as we seek to rebuild our community,"
said James R. Moffett and Richard C. Adkerson, Co-Chairmen of
McMoRan. McMoRan is engaged in exploratory activities on the
following prospects, West Cameron Block 43, JB Mountain Deep at
South Marsh Island Block 224, Cane Ridge at Louisiana State Lease
18055, and Long Point at Louisiana State Lease 18090, and two
development wells (King King No. 2 at Vermilion Blocks 16/17 and
Hurricane No. 2 at South Marsh Island Block 217). Rigs on location
suffered no significant damage and are currently drilling. McMoRan
expects to commence drilling four additional prospects by year-end
2005 and is also actively pursuing opportunities through its
exploration venture to acquire additional acreage and prospects
through farm-in or other arrangements. -0- *T DRILLING SCHEDULE Net
Proposed Working Revenue Current Total Spud Interest Interest Depth
Depth Date
----------------------------------------------------------------------
In-Progress
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April 25, West Cameron Block 43(a) 41.7% 32.3% 18,500' 18,500' 2005
----------------------------------------------------------------------
South Marsh Island Block 224 July 14, "JB Mountain Deep"(a) 27.5%
19.4% 14,100' 23,000' 2005
----------------------------------------------------------------------
Louisiana State Lease 18090 July 21, "Long Point" 37.5% 26.8%
14,600' 20,000' 2005
----------------------------------------------------------------------
Louisiana State Lease 18055 July 29, "Cane Ridge" 37.5% 27.5%
13,900' 16,500' 2005
----------------------------------------------------------------------
Development Wells
----------------------------------------------------------------------
Vermilion Blocks 16/17 Aug. 12, "King Kong No. 2" 40.0% 29.2%
8,800' 13,750' 2005
----------------------------------------------------------------------
South Marsh Island Block 217 Aug. 21, "Hurricane No. 2" 27.5% 19.4%
1,000' 16,000' 2005
----------------------------------------------------------------------
Near-Term Well(b)
----------------------------------------------------------------------
Third- Louisiana State Lease 18350 Quarter "Point Chevreuil" 25.0%
17.5% n/a 17,000' 2005
----------------------------------------------------------------------
(a) Depending upon applicability of the Deep Gas Royalty Relief
eligibility criteria, the leases on which these wells are located
could be eligible for royalty relief up to 25 Bcf under current
Minerals Management Service guidelines. McMoRan's net revenue
interest would increase during the royalty relief period for
eligible leases. (b) Timing is subject to change. *T MAIN PASS
ENERGY MPEH(TM) UPDATE McMoRan has completed an initial assessment
of its MPEH(TM) platforms following Hurricane Katrina, which passed
approximately 50 miles west of the facility. There was no apparent
significant damage to the platforms, which were designed to
withstand significant storm events. As previously reported, McMoRan
is working to establish a major new offshore LNG import terminal at
Main Pass Block 299 and has applied for a license for the proposed
project under the Deepwater Port Act. The Deepwater Port Act was
amended in 2002 to include natural gas ports to help meet the
expected U.S. demand for natural gas by expanding access to
worldwide supply sources. In connection with the licensing process,
the United States Coast Guard (Coast Guard) and the Maritime
Administration published in June 2005 a Draft Environmental Impact
Statement (EIS) for the MPEH(TM) Deepwater Port License
Application, and conducted public meetings in July 2005 to allow
public comments on the draft EIS. The draft EIS evaluated potential
environmental impacts associated with construction and operation of
MPEH(TM) and concluded that the project would not result in
significant adverse impacts. As part of the licensing process, the
Coast Guard receives comments on the Draft EIS for consideration in
preparation of the Final EIS. The Coast Guard is now in the process
of preparing the Final EIS and has requested additional information
in response to comments received on the Draft EIS, primarily
related to fisheries, air quality and water quality. The Coast
Guard has indicated that the information requested will not require
a significant amount of time to obtain. In addition, the Coast
Guard is adjusting the current schedule to allow for the
publication of the Final EIS prior to the final public hearing. To
accommodate the information request and the schedule adjustment,
the Coast Guard has temporarily suspended the 330-day review
period, indicating that the suspension will be of short duration.
Based on this schedule, publication of the Final EIS and the
subsequent final public meetings would occur in fourth quarter of
2005 and a record of decision on the license application would be
received in the first quarter of 2006, within 90 days of the final
public meeting. A copy of the Coast Guard letter is being filed
with the press release on Form 8-K with the Securities and Exchange
Commission. The MPEH(TM) terminal is located in 210 feet of water
and would be capable of regasifying LNG at a rate of 1 Billion
cubic feet (Bcf) per day. The use of existing facilities provides
significant cost advantages and the proposed project's offshore
location near established shipping lanes is advantageous.
Additional investments are being considered to develop significant
on-site cavern storage for natural gas in the large salt dome
structure at this site and for pipeline connections to enhance gas
delivery from Main Pass to markets in the United States. The
proximity of the proposed project to major natural gas markets and
the availability of on-site salt dome cavern storage provide a
potential opportunity to expand the project beyond a typical LNG
receiving facility, creating opportunities for substantial
additional values. The proposed design includes 28 Bcf of initial
cavern storage availability and aggregate peak deliverability from
the proposed terminal, including deliveries from storage, of up to
2.5 Bcf per day. McMoRan is continuing discussions with potential
LNG suppliers in the Atlantic Basin and natural gas consumers in
the United States to develop commercial arrangements for the
facilities. McMoRan's operating personnel are currently operating
at temporary offices in Houston, Texas and its financial and
administrative personnel are establishing temporary offices in
Baton Rouge, LA. Updates on office locations and contact
information will be posted to mcmoran.com. McMoRan Exploration Co.
is an independent public company engaged in the exploration,
development and production of oil and natural gas offshore in the
Gulf of Mexico and onshore in the Gulf Coast area. McMoRan is also
pursuing plans for the development of the Main Pass Energy Hub(TM)
(MPEH(TM)) which will be used for the receipt and processing of
liquefied natural gas and the storage and distribution of natural
gas. Additional information about McMoRan and the MPEH(TM) project
is available on its internet website "www.mcmoran.com" and at
"www.mpeh.com."
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