Like its namesake, Blackbeard may reveal buried treasure

— One of the most underreported E&P stories of recent months is the apparent discovery at the Blackbeard West well in the geologically deep Gulf of Mexico Continental Shelf, made by a tiny operator which has probed depths its mammoth predecessor failed to attain.

And if little McMoRan Exploration confirms its theory about the well known as Blackbeard West, it will have solved a mystery that has puzzled geologists for years: does the ultradeep Gulf Shelf, in shallow waters but at total depths below 25,000 feet, in any way resemble the geology dozens of miles away and in much deeper waters? It appears the answer may be yes. McMoRan officials say Blackbeard, drilled in 70 feet of water, is located in the same Miocene-age sands as big deepwater fields like Anadarko-operated K-2, located about 100 miles southeast and in 4,000 feet of water. "The idea is to take the discoveries being found out in the deepwater Gulf of Mexico that come on production at very high rates and track those sands back onto the Shelf," John Schiller, CEO of Energy XXI, a Blackbeard partner, said at a recent industry conference. That has been McMoRan's mission for more than a year, ever since it re-entered an earlier well drilled by another consortium. Recently co-chairman Jim Bob Moffett told analysts his company has found the "missing link" between Miocene sands onshore and in the deepwater. "We have to restrain ourselves when we talk about it," he said. Other companies are also exploring the ultradeep Shelf -- Shell, for example, too. But so far, no discoveries have been made at extreme depths. At this point, McMoran is betting Blackbeard is a discovery, but adds confirmation will only come with further tests. Blackbeard is perhaps the most closely-watched well on the ultradeep Shelf. For one thing, it was pegged as the deepest such well, with a targeted depth below 30,000 feet, although the initial drilling attempt in 2004-2005 called it quits at 30,067 feet because of mechanical issues. The price tag was reputed to top $200 million. That well had behind it the clout of ExxonMobil, which led a consortium that has since changed members. When the other partners also pulled out of that property, owner Newfield Exploration sold it and the rest of its Shelf operation to McMoRan in 2007. McMoRan saw something it liked in Blackbeard and decided to re-enter and deepen the well. This time around, drilling reached around 33,000 foot depths and Blackbeard was tentatively declared a discovery, even though much work remains before it reaches a stage where it can be produced. Things are now at a lull while McMoRan and its partners, which include Plains Exploration and Energy XXI, wait for needed well-testing equipment which may take months to arrive. In the meantime, Blackbeard sits offshore -- ready, like its 18th-century pirate namesake, to unearth heaps of buried treasure and forever change the way explorers see the Gulf Shelf.