Hess 'encouraged' by Huron exploratory well in US Gulf of Mexico

Hess Corp is "encouraged" by drilling operations concluded in second-quarter 2022 at its operated Huron well located in the US deepwater Gulf of Mexico, a top company executive said July 27.

The Gulf is a region that normally doesn't grab huge headlines for the company, which is better known for its partnership in an ExxonMobil-led group that has had prolific success offshore Guyana.

But the US Gulf, where Hess operates several production platforms, offers sturdy cash flows and remains a "very important part" of its portfolio, Greg Hill, the company's chief operating officer and president of exploration and production, said during a second-quarter earnings conference call.

Huron had targeted a new Miocene subsalt fairway in the Northern Green Canyon area and Hess discovered "high quality oil in good quality Miocene sands," Hill said.

The well, drilled on Green Canyon Block 69 to a depth of nearly 29,000 feet, showed "very encouraging results ... particularly for the Northern Green Canyon basin, where we have a very competitive leasehold," he said.

Besides generating dependable cash flows at a time of high oil prices, the US Gulf is also a crucial cash engine for activities such as expanding development offshore Guyana, Hill said. In Guyana, Hess, ExxonMobil and China's CNOOC have two producing developments, two other developments under construction and still others in the planning stage.

US Gulf growth possible

"Our objective in the Gulf is to add a minimum sustained production cash flow through tieback opportunities and also selectively pursuing hub-class exploration opportunities," Hill said. "If we can grow it, we want to."

In recent years, the company has been "selectively rebuilding" its portfolio in the US Gulf and since that time has acquired 60 new lease blocks in the region for a current total of 80 Hess-leased blocks, he said.

Those opportunities are balanced between high return tiebacks – prospects near existing production hubs that are relatively cheap to drill and can be tied in fairly quickly, but also may have a lower reserves – and hub-class new exploration prospects that often contain large reserves but could take five or more years to drill, appraise, build and bring online.

Hess is planning an appraisal sidetrack on Huron, and the company is enthused over the results they've seen there, Hill said, but added even more encouraging is that the well has opened up additional opportunities in the surrounding areas nearby.

"As a result of what we're seeing at Huron, we see additional prospectivity in that Northern Green Canyon area, and we have a very competitive leasehold position there," he said.

Huron still being evaluated

Hill declined to provide pre-drill reserve estimates, saying the company doesn't release those figures. However, he noted the well is still under evaluation and that more information will be released as the company appraises the asset.

Hess operates Huron with 40% working interest; Chevron and Shell each hold 30%.

The Huron discovery comes on the back of Hess' announcement late July 26, along with a separate news release by ExxonMobil, of the Guyana partners' successful two new exploratory wells in Guyana, Seabob-1 and Kiru-Kiru-1, on that country's offshore Stabroek Block.

The two new finds brings to 28 the number of significant discoveries by the Stabroek consortium since May 2015, when they discovered the Liza field which now has two FPSOs that combined are producing more than 360,000 b/d.

In Q2, Hess' Gulf of Mexico production totaled 29,000 b/d of oil equivalent, just over half of the 52,000 boe/d posted in Q2 2021, primarily stemming from field declines and unplanned downtime at the company's Stampede and Penn State fields.

In Q3, US Gulf net production is projected to average 25,000 boe/d to 35,000 boe/d, which reflects planned downtime at Hess' Tubular Bells production hub and a well at the Penn State field that was shut in from a mechanical issue, Hill said.

But the Q3 planned downtime will be partly offset by a planned startup of the Llano-6 tieback well in August, which recently logged 123 feet of high-quality Miocene pay, he said.

Hess' overall production in Q2 totaled 303,000 boe/d, up 10% from three months earlier but down about 1% from the same quarter in 2021.