McMoRan hopes for brand new discovery

Just off the coast of Vermilion Parish in waters about 20 feet deep, McMoRan Exploration is breaking new ground.

For at least two years, McMoRan has been exploring the Davy Jones Prospect.

McMoRan reported finding substantial natural gas reserves it believes can be produced with two wells at depths greater than 30,000 feet, said Scott Angelle, secretary of the Louisiana Department of Natural Resources.

McMoRan President and CEO Jim Bob Moffett on Wednesday released to shareholders his "State of Davy Jones," an update on the project.

One challenge the company faced was whether it could drill deeper than ever before in shallow water, Moffett wrote.

"The challenge of drilling deeper included learning not only how to drill a well in temperatures in excess of 25,000 pounds per square inch, but also how to evaluate the data from the well," he said. "Logging and other data, which was reliable in our shallower drilling, did not work at these depths."

McMoRan worked with several service companies to assemble a team of experts to develop the equipment and processes to proceed, Moffett said.

He and the industry await results of a flow-test, which is needed to determine the mobility of the oil and gas.

Testing will take place in stages.

"The logs and accompanying other data on this 20,000-acre closure have given us every indication that this prospect has the earmarks of a major Wilcox (formation) discovery right in the middle of the Gulf of Mexico shelf," Moffett wrote. "This is truly a new adventure."

McMoRan also is exploring other Gulf discoveries that will require testing and is moving some operations onshore to see if the same ultra-deep finds exist there.