Vast Oil Pool Tapped in Gulf of Mexico

[warpedskydiver 0]

Vast Oil Pool Tapped in Gulf of Mexico
Tuesday, September 5, 2006 5:15 PM EDT
The Associated Press
By BRAD FOSS

WASHINGTON (AP) — A trio of oil companies led by Chevron Corp. has tapped a petroleum pool deep beneath the Gulf of Mexico that could boost the nation's reserves by more than 50 percent.

A test well indicates it could be the biggest new domestic oil discovery since Alaska's Prudhoe Bay a generation ago. But the vast oil deposit roughly four miles beneath the ocean floor won't significantly reduce the country's dependence on foreign oil and it won't help lower prices at the pump anytime soon, analysts said.

"It's a nice positive, but the U.S. still has a big difference between its consumption and indigenous production," said Art Smith, chief executive of energy consultant John S. Herold. "We'll still be importing more than 50 percent of our oil needs."

Chevron on Tuesday estimated the 300-square-mile region where its test well sits could hold between 3 billion and 15 billion barrels of oil and natural gas liquids. The U.S. consumes roughly 5.7 billion barrels of crude-oil in a year.

It will take many years and tens of billions of dollars to bring the newly tapped oil to market, but the discovery carries particular importance for the industry at a time when Western oil and gas companies are finding fewer opportunities in politically unstable parts of the world, including the Middle East, Africa and Russia.

The proximity of the Gulf of Mexico to the world's largest oil consuming nation makes it especially attractive. And it could bring pressure on Florida and other states to relax limits they have placed on drilling in their offshore waters for environmental and tourism reasons.

The country's reserves currently are more than 29 billion barrels of oil equivalent, according to the U.S. Energy Department. But the U.S. imports most of its oil from abroad and its overall supply is tiny when compared with, say, Saudi Arabia, whose reserves exceed 250 billion barrels.

Chevron's well, called "Jack 2," was drilled about 5.3 miles below sea level. Chevron has a 50 percent stake in the field, while partners Statoil ASA of Norway and Devon Energy Corp. of Oklahoma City own 25 percent each.

During the test, the Jack 2 well sustained a flow rate of more than 6,000 barrels of oil per day, but analysts and executives believe the payoff could be much larger than that.

The financial implications of the prospect are most significant for independent oil and gas producer Devon, which is the smallest of the three partners. Devon's shares soared 12 percent on the New York Stock Exchange.

"This could not have happened in a better place," Devon CEO Larry Nichols said in a conference call with analysts.

The successful test well does not mean a huge supply of cheap oil will hit the market anytime soon.

Oppenheimer & Co. analyst Fadel Gheit estimated that the first production for the Chevron-led partnership might not come on line until after 2010, depending on how many more test wells the companies drill. That said, many companies, including BP PLC, Exxon Mobil Corp. and Anadarko Petroleum Corp., stand to benefit from their own projects in the so-called lower tertiary, a rock formation that is 24 million to 65 million years old.

"They may be the first ones to hit the jackpot, but if the current thinking is correct, this is only a beginning," Gheit said.

The well was drilled in the Walker Ridge area of the Gulf, about 270 miles southwest of New Orleans and 175 miles off the coast. It followed up a discovery made by Chevron in 2004.

San Ramon, Calif.-based Chevron said the well set a variety of records, including the deepest well successfully tested in the Gulf of Mexico. Chevron said the well was drilled more than 20,000 feet under the sea floor below 7,000 feet of water for a total depth of 28,175 feet.

Shares of Devon rose $7.99 to close at $72.14 on the New York Stock Exchange, above the top end of the stock's 52-week range of $48.94 to $70.35. Shares of Chevron rose $1.51, or 2.3 percent, to finish at $66.34.

[TheAnvil 0]

I read this. Interesting. I think in a couple of recent issues of THE ECONOMIST they've had articles on how the state owned petroleum companies have a lock on the majority of the world's oil resources. I think the privatization of such firms would go a long way towards meeting the world's increasing energy demands in a more economic manner.

Vinny the Anvil
Post Traumatic Didn't Make The Lakers Syndrome is REAL
JACKASS POWER!!!!!!

[sundevil777 93]

I think the US should set as a national policy that energy independence shall be reached by a date certain. I'm not proposing what the schedule should be, but it should be a date certain, with tax money or gas tax dollars spent to make it happen because it is a matter of national security.

Of course it would have the wonderful effect of greatly reducing the influence and importance of a bunch of bad guys.
I think it might also make them quite nervous to know of their impending demise. Some quite interesting things might happen politically in the mideast if that knowledge was certain. Things might then actually happen that would allow that policy to no longer be needed.

People are sick and tired of being told that ordinary and decent people are fed up in this country with being sick and tired. I’m certainly not, and I’m sick and tired of being told that I am

[Rookie120 0]

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I think the US should set as a national policy that energy independence shall be reached by a date certain. I'm not proposing what the schedule should be, but it should be a date certain, with tax money or gas tax dollars spent to make it happen because it is a matter of national security.

Sounds like a good plan to me. I'm not a politician so I have no idea how you would make this happen to become a reality.

If you find yourself in a fair fight, your tactics suck!

[sundevil777 93]

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Quote

I think the US should set as a national policy that energy independence shall be reached by a date certain. I'm not proposing what the schedule should be, but it should be a date certain, with tax money or gas tax dollars spent to make it happen because it is a matter of national security.

Sounds like a good plan to me. I'm not a politician so I have no idea how you would make this happen to become a reality.

It would take money and probably allowing oil/gas production in the Rockies, Gulf of Mexico and Alaska.

Now that I think of it, I'd be OK for it to be a combined energy independence with Canada. As we know, the sands/shale up there is just waiting. Only a matter of time, money and the political will to push for it.

Wasn't Jimmy Carter actually making noises about energy independence as a policy?

Perhaps it would be OK to include Mexico (they also have a shitload of oil and a good Mexican economy is good for the US). A coalition of 3 countries removing themselves from the world oil market... For this strategy to be effective, it might mean that all the refining must be included in the plan. It would be worth the tax dollars spent.

If Bush put forth such a big idea plan as a critical objective, the Republicans would be setting the agenda for the elections, surely the Dems would have to oppose it for environmental reasons. Instead of talking about date certain for getting out of Iraq, we'd be talking about date certain for thumbing our nose at OPEC.

People are sick and tired of being told that ordinary and decent people are fed up in this country with being sick and tired. I’m certainly not, and I’m sick and tired of being told that I am

[rickjump1 0]

Getting off the Arab oil teat/tit is like securing the borders. This president has too many Mexican and Arab friends to listen. I'm on your side, but like his old man, this guy doesn't care what the citizens think.

Do your part for global warming: ban beans and hold all popcorn farts.

[sundevil777 93]

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Getting off the Arab oil teat/tit is like securing the borders. This president has too many Mexican and Arab friends to listen. I'm on your side, but like his old man, this guy doesn't care what the citizens think.

I try to be more optomistic about politicians. With some exceptions they all want to do good, but by going different ways.

I'd much rather we rely on Mexico and Canada for more of our oil imports than the mideast members of OPEC.

BUST OPEC! or at least make them irrelevant.

People are sick and tired of being told that ordinary and decent people are fed up in this country with being sick and tired. I’m certainly not, and I’m sick and tired of being told that I am

[rickjump1 0]

Like I said, I'm on your side. It's a great idea. Hope it works.

Do your part for global warming: ban beans and hold all popcorn farts.

[PhreeZone 15]

We import more from Vensuela then from the Mideast. I'd be more worried about what Chavez is doing then OPEC. We need to bring usage down to lower then domestic output to make the needed impact to get off foriegn oil. Issue is that domestic usage is climbing more now then ever and its not just Gas, its the releated products that are driving that usage also.

Yesterday is history
And tomorrow is a mystery

Parachutemanuals.com

[micro 0]

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I think the US should set as a national policy that energy independence shall be reached by a date certain. I'm not proposing what the schedule should be, but it should be a date certain, with tax money or gas tax dollars spent to make it happen because it is a matter of national security.

Of course it would have the wonderful effect of greatly reducing the influence and importance of a bunch of bad guys.
I think it might also make them quite nervous to know of their impending demise. Some quite interesting things might happen politically in the mideast if that knowledge was certain. Things might then actually happen that would allow that policy to no longer be needed.

That there seems like a good plan. Anyway it could backfire?

I miss Lee.
And JP.
And Chris. And...

[sundevil777 93]

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We import more from Vensuela then from the Mideast. I'd be more worried about what Chavez is doing then OPEC. We need to bring usage down to lower then domestic output to make the needed impact to get off foriegn oil. Issue is that domestic usage is climbing more now then ever and its not just Gas, its the releated products that are driving that usage also.

Quite right.

Chavez will be out of luck also.

Oil has for so long been thought of as a weapon at our throats. I say turn it around, because when oil is going for around $70/barrel we have economically viable alternatives. The US economy hasn't stopped, and we can confidently tell Venezuela and others we don't want their oil.

Oil turns into our weapon, at a price that we know we can live with.

It would spur a lot of activity/jobs in oil and also alternative fuel sources, by 'artificially' setting a minimum price of sorts. This would encourage investment in new alternatives, because there is less risk, compared to the possiblity of cheaper oil in the future.

People are sick and tired of being told that ordinary and decent people are fed up in this country with being sick and tired. I’m certainly not, and I’m sick and tired of being told that I am

[sundevil777 93]

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That there seems like a good plan. Anyway it could backfire?

It could wind up costing more than expected. It could costly to politicians if the public perceived little value, it might be hard to get the public to appreciate the changes that might happen in the world politically. The changes in oil exporting countries might cause some war that wouldn't have happened it they had remained fat on oil revenue. I suppose it could be used to justify a terrorist attack, "the US has declared economic war against us..."

It is kinda like what environmentalists have advocated - much more aggressively subsidizing the creation of alternative energy sources, being willing to accept high energy costs, but doing it for different primary reasons.

People are sick and tired of being told that ordinary and decent people are fed up in this country with being sick and tired. I’m certainly not, and I’m sick and tired of being told that I am

[micro 0]

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The changes in oil exporting countries might cause some war that wouldn't have happened it they had remained fat on oil revenue. I suppose it could be used to justify a terrorist attack, "the US has declared economic war against us..."

that was my gut reaction to the plan, but still well worth it, IMO.

I miss Lee.
And JP.
And Chris. And...

[billvon 2,405]

Good news for our future oil needs. I very much hope that this new find becomes part of a coherent energy strategy rather than a way to reduce oil prices for a few years before we suck it dry - but I suspect it will be the latter.

[Zenister 0]

I think you'd find more resistance from the Corporate Interests who would use their media influence to push the public sheep in the direction they wished..

but then have little faith in politicians or in the people system who that elects them...

____________________________________
Those who fail to learn from the past are simply Doomed.

[diverborg 0]

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Good news for our future oil needs. I very much hope that this new find becomes part of a coherent energy strategy rather than a way to reduce oil prices for a few years before we suck it dry - but I suspect it will be the latter.

I disagree. They should suck it dry. I want my cheap gas now!! Screw the future generations. I don't plan on having any kids myself so its not my concern.

[jumper03 0]

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Good news for our future oil needs. I very much hope that this new find becomes part of a coherent energy strategy rather than a way to reduce oil prices for a few years before we suck it dry - but I suspect it will be the latter.

I disagree. They should suck it dry. I want my cheap gas now!! Screw the future generations. I don't plan on having any kids myself so its not my concern.

oddly enough I agree with this sentiment. The faster we use all of our oil, the faster we'll be forced to come up with an alternative energy source.

Scars remind us that the past is real

[diverborg 0]

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[oddly enough I agree with this sentiment. The faster we use all of our oil, the faster we'll be forced to come up with an alternative energy source./reply]

I was pretty much being sarcastic, but you do have a point. I really don't care much either way.

• Quote

[wmw999 2,126]

My BF works for Chevron. From reading the press releases, he said that while this is a lot of oil, being at the technological edge in so many ways, it's by no means cheap oil.

He also showed me a graph in one of his magazines. Current industry projections are for world oil consumption to continue to grow for about 20 more years, and then solar and other renewable sources will begin to take over. Kind of depressing, but likely true.

All each of us can do is what we can do. Whining about it won't help a whole lot more.

Wendy W.

There is nothing more dangerous than breaking a basic safety rule and getting away with it. It removes fear of the consequences and builds false confidence. (tbrown)

[slug 1]

Hi 777

Quote

Wasn't Jimmy Carter actually making noises about energy independence as a policy?

I think he was the one, and also stated the oil reserve stockpiles.

I think the problem was/is that most of the inexpensive sources of oil have already been developed

During the first spike in oil prices and the shortage in supplies (opec induced) The increase in the price of oil made economic sense to explore and develope new resources.

Opec then increased the supply of oil which drove the price down and made it less cost effective to develope new resources of oil. This resulted in a lot of oil rigs sittting idle and unemployement in the oil industry.

The new oil supply discovered in the gulf is going to be very expensive to develope due to its depth and location and will only be cost effective to develope if the price of oil maintains a certain level, sadly OPEC
Can still control the price by controlling the supply of their cheap oil.

Price is controlled by the law of supply and demand

R.I.P.

[billvon 2,405]

>sadly OPEC Can still control the price by controlling the supply of their cheap oil.

Not for much longer. They are near capacity now.

[Remster 24]

Be prepared to be at the mercy of Canadia, Biatches!

Remster

[avenfoto 0]

oil as an energy source is so outdated and polluting its f'ing retarded. it is TWO THOUSAND SIX people.

weve been driving internal combustion driven autos for what 60ish years now?

where is my solar powered flying machine?

we can put habitats in a -200 degree vaccum, orbiting the earth, build bombs that can vaoprize entire metropolises, make jetliners FLY, even engineered an inflatable, compactable, nylon wing for sport, but cant find a way to get around without emitting gases and consuming resources destroying the one and only planet we have all at the same time.

pathetic really.

[mr2mk1g 10]

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Anyway it could backfire?

I don't claim to be at all authoritative on this subject, but how about this train of thought?:

The US stops buying billions of barrels of oil from the world market and uses domestic oil which, being technologically harder to obtain is, relatively speaking, more expensive to produce, (though at the time of the switch perhaps no more expensive than global oil is to buy).

Supply vs demand = price

Worldwide demand just dropped as the US is no longer buying global oil, so the price goes down.

The US is using domestic oil which can't be produced any cheaper than it is being. Everyone else is buying cheap oil on the world market. China is buying cheap oil. So is India. Russia is selling it. So is Iran.

If any of that is remotely accurate... I don't exactly see it being a particularly good set of circumstances for the US to be inflicting on itself.

[slug 1]

Hi Mr2

The us will continue to buy oil on the world maket as long as it's less expensive than producing our own.

The oil found in the gulf will continue to increase in value as we continue to consume the less expensive oil.

One side of the equation that hasn't been addressed is the shortage of refineing capacity in the US. Unless we start the the permitting/construction process now, we'll still take it in the shorts everytime there's a interuption in the refining process regardless of where we get the raw product.

R.I.P.