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September 3, 2009
BP Discovers ‘Giant’ Oil Field in Gulf of Mexico
By CLIFFORD KRAUSS
HOUSTON — The British oil giant, BP, announced on Wednesday the discovery of what it characterized as a “giant” oil field more than six miles deep in the Gulf of Mexico, but it may take years to assess how much crude can actually be recovered.
The discovery should have no immediate impact on world oil or gasoline prices since it could take three years or more to begin extracting the resource. Because the oil is so deep underwater and difficult to extract, the price of oil will need to be above $70 a barrel to make drilling profitable, according to energy analysts.
Nevertheless the discovery was another indication that the deep waters of the Gulf of Mexico are probably the most promising area in the country to bolster domestic oil production. The rise in Gulf production in recent years, in large part because of BP’s deep-water giant Thunder Horse field, has stabilized domestic production after almost two decades of yearly declines.
“This is big,” said Chris Ruppel, a senior energy analyst at Execution, a London-based investment bank. “It says we’re seeing that improved technology is unlocking resources that were before either undiscovered or too costly to exploit because of economics.”
The “Tiber” well discovery is about 250 miles southeast of Houston at a depth of more than 35,000 feet — greater than the height of Mount Everest. It is part of a new frontier of exploration where oil companies are spending billions of dollars to find oil off the shores of Brazil and West Africa and boring through miles of rock, salt and packed sands.
The discoveries have been made possible by leaps in development of offshore drilling technology, computers and three-dimensional imaging that can pinpoint where the best reserves lie, and advanced mooring equipment to stabilize platforms in deep waters. BP executives say the oil and gas in the field is extremely hot and under intense pressure, requiring advanced well heads with thick steel and exceptional insulation.
In its announcement of the discovery, BP would not estimate the size of the new reserve. It said the well would be one of the deepest ever drilled by an oil company. BP, which is the largest producer of oil and gas in the Gulf, will operate the well with a 62 percent interest. Petrobras and ConocoPhillips also own shares.
“The information we have gathered thus far is encouraging,” said Daren Beaudo, a BP spokesman, who said one well has already been drilled in the area. “But appraisal work will be required before we know the field’s size and determine how it should be developed. It’s the next wave of development of the ultra deep water Gulf of Mexico.”
The Tiber well along with the Kaskida discovery in 2006, according to a statement by Andy Inglis, BP’s chief executive for exploration and production, “support the continuing growth of our deepwater Gulf of Mexico business into the second half of the next decade.”
The Gulf of Mexico accounts for about a quarter of the nation’s oil production, and that percentage could rise even though many shallow water wells are tapping out.
But the Gulf is also a treacherous place to rely on oil due to hurricanes, which have been particularly fierce in recent years. Last year hurricanes Gustav and Ike shut down wells, damaged pipelines and forced companies to evacuate workers from production platforms for weeks, resulting in an estimated loss of 63 million barrels of production.
Deep-water drilling in the Gulf has produced some major challenges and delays. BP’s Thunder Horse platform, the biggest in the Gulf and producing 300,000 barrels a day, was first drilled in 1999 but did not begin to produce for a decade due to a string of engineering problems.
http://www.nytimes.com/2009/09/03/bu...l.html?_r=1&hp
The discovery should have no immediate impact on world oil or gasoline prices since it could take three years or more to begin extracting the resource. Because the oil is so deep underwater and difficult to extract, the price of oil will need to be above $70 a barrel to make drilling profitable, according to energy analysts.
Nevertheless the discovery was another indication that the deep waters of the Gulf of Mexico are probably the most promising area in the country to bolster domestic oil production. The rise in Gulf production in recent years, in large part because of BP’s deep-water giant Thunder Horse field, has stabilized domestic production after almost two decades of yearly declines.
“This is big,” said Chris Ruppel, a senior energy analyst at Execution, a London-based investment bank. “It says we’re seeing that improved technology is unlocking resources that were before either undiscovered or too costly to exploit because of economics.”
The “Tiber” well discovery is about 250 miles southeast of Houston at a depth of more than 35,000 feet — greater than the height of Mount Everest. It is part of a new frontier of exploration where oil companies are spending billions of dollars to find oil off the shores of Brazil and West Africa and boring through miles of rock, salt and packed sands.
The discoveries have been made possible by leaps in development of offshore drilling technology, computers and three-dimensional imaging that can pinpoint where the best reserves lie, and advanced mooring equipment to stabilize platforms in deep waters. BP executives say the oil and gas in the field is extremely hot and under intense pressure, requiring advanced well heads with thick steel and exceptional insulation.
In its announcement of the discovery, BP would not estimate the size of the new reserve. It said the well would be one of the deepest ever drilled by an oil company. BP, which is the largest producer of oil and gas in the Gulf, will operate the well with a 62 percent interest. Petrobras and ConocoPhillips also own shares.
“The information we have gathered thus far is encouraging,” said Daren Beaudo, a BP spokesman, who said one well has already been drilled in the area. “But appraisal work will be required before we know the field’s size and determine how it should be developed. It’s the next wave of development of the ultra deep water Gulf of Mexico.”
The Tiber well along with the Kaskida discovery in 2006, according to a statement by Andy Inglis, BP’s chief executive for exploration and production, “support the continuing growth of our deepwater Gulf of Mexico business into the second half of the next decade.”
The Gulf of Mexico accounts for about a quarter of the nation’s oil production, and that percentage could rise even though many shallow water wells are tapping out.
But the Gulf is also a treacherous place to rely on oil due to hurricanes, which have been particularly fierce in recent years. Last year hurricanes Gustav and Ike shut down wells, damaged pipelines and forced companies to evacuate workers from production platforms for weeks, resulting in an estimated loss of 63 million barrels of production.
Deep-water drilling in the Gulf has produced some major challenges and delays. BP’s Thunder Horse platform, the biggest in the Gulf and producing 300,000 barrels a day, was first drilled in 1999 but did not begin to produce for a decade due to a string of engineering problems.
http://www.nytimes.com/2009/09/03/bu...l.html?_r=1&hp
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