Storms Fail to Halt Kerr-McGee Output

By Adam Wilmoth, The Daily Oklahoman

Feb. 22–Kerr-McGee Corp. has received initial production from its Ticonderoga field in the deepwater Gulf of Mexico nearly two months ahead of schedule, the Oklahoma City-based energy company said Tuesday.

The increased production pace comes despite the Gulf’s back-to-back barrages from Hurricanes Katrina and Rita, and from labor and equipment shortages in the region after the storms.

“This truly is a remarkable achievement by our employees and contractors whose execution of this project was second to none,” said Dave Hager, Kerr-McGee’s chief operating officer.

The announcement also drew praise from Wall Street.

“More than anything, this should indicate to investors and the market the upside that remains in the deepwater Gulf of Mexico, particularly for this company, but also for the whole industry,” said Tom Covington, an industry analyst with A.G. Edwards in Denver.

“The perception of the Gulf of Mexico has taken somewhat of a hit since the hurricane last fall. Completing projects like this is very important to changing investors’ perceptions about the Gulf of Mexico.”

While Kerr-McGee diversified its asset base with an expansion into the Rocky Mountain region in 2004, the Gulf of Mexico still represents about 40 percent of Kerr-McGee’s 2005 production.

Ticonderoga lies beneath 5,250 feet of water about 190 miles south of New Orleans. Kerr-McGee operates the field with a 50 percent working interest. Houston-based Noble Energy Inc. holds the remaining 50 percent interest in the field.

The field is expected to contain 30 million to 50 million barrels of producible crude oil equivalent. It has reached peak production of about 20,000 barrels of oil per day and 15 million cubic feet of natural gas per day, according to Kerr-McGee.

Production from the Ticonderoga field is routed to Kerr-McGee’s Constitution production spar.

“This is a big development for Kerr-McGee to have the Constitution spar up and running and to have production flowing from the Ticonderoga field,” Kerr-McGee spokesman John Christiansen said. “These are big developments that account for 10 (percent) to 12 percent of our deepwater production.”

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