‘Giant’ Oil Discovery in Gulf of Mexico

[DarrinS]

http://www.bloomberg.com/apps/news?pid=20601087&sid=a44RUTBIl_3Q






Sept. 2 (Bloomberg) -- BP Plc, Europe’s second-largest oil company, reported a “giant” discovery at the Tiber Prospect in the U.S. Gulf of Mexico that may contain more than 3 billion barrels, after drilling the world’s deepest exploration well.

The well is located about 250 miles (400 kilometers) southeast of Houston, the London-based company said today in a statement. It was drilled to approximately 35,055 feet (10,685 meters), greater than the height of Mount Everest.

The latest discovery will help BP, already the biggest producer in the Gulf of Mexico, boost output in the region by 50 percent to 600,000 barrels of oil equivalent a day after 2020. It’s equal to about a year’s output from Saudi Arabia, the biggest exporter in the Organization of Petroleum Exporting Countries, as well as coming close to matching the U.K.’s entire proven reserves.

“It will take a while to develop, the second half of next decade, but it’s very important,” Jonathan Rigby, an analyst at UBS AG in London, said in a telephone interview.

BP climbed 22.15 pence, or 4.3 percent, to 541.65 pence in London, the highest close since January. BP has gained 3 percent since the start of this year.

BP, led by Chief Executive Officer Tony Hayward, is developing nine projects in the Gulf of Mexico and overtook Royal Dutch Shell Plc in terms of output in the region after ramping up the Thunder Horse platform to more than 300,000 barrels of oil equivalent a day.

Thunder Horse

Hayward, who took over as CEO from John Browne in May 2007, is boosting production growth after delays at projects including Thunder Horse led to an operational gap with rivals. BP has a history of pushing back the frontiers of exploration in North America, and pioneered enhanced oil recovery techniques in Alaska.

Oil companies have been increasingly turning to more technically challenging fields as oil-rich nations limit access. Tiber will help allay concerns over BP’s growth prospects given its reluctance to invest heavily in unconventional projects, such as oil sands in Canada, to replenish reserves as maturing fields age.

“What today’s announcement proves is that BP is a very, very successful explorer,” Irene Himona, an oil and gas analyst at Exane BNP Paribas, said by telephone. “They’ve opened up the whole area for discoveries.”

Other major finds by the oil industry in recent years include the Tupi field in Brazil’s pre-salt region, the largest oil discovery in the Americas since Mexico’s Cantarell in 1976. Tupi may hold as many as 8 billion barrels of oil.

Production Boost

BP could potentially raise production by between 1 and 2 percent a year from 2013 to 2020, according to Andy Inglis, BP’s chief executive for exploration and production.

“Tiber represents BP’s second material discovery in the emerging Lower Tertiary play in the Gulf of Mexico, following our earlier Kaskida discovery,” Inglis said in today’s statement.

The new discovery “will be bigger” than Kaskida, which is estimated to hold 3 billion barrels, BP spokesman Robert Wine said. “This is a whole new geological play we’ve got here.”

The British producer last month bought additional acreage in the Lower Tertiary, or so-called Paleogene, region of the Gulf of Mexico. The 24 million-to 65 million-year-old formation, where both Exxon Mobil Corp. and Chevron Corp. are drilling wells, was previously thought to be unreachable. Tiber is the deepest exploration well ever drilled by the oil and gas industry, BP said.

Second Well

BP said it’s the largest net leaseholder in the Lower Tertiary area. “I believe there are other structures to investigate,” Wine said. The company plans to drill a second well at Tiber next year, he added.

BP is operator of the Tiber project with a stake of 62 percent, while Petroleo Brasileiro SA, Brazil’s state-controlled oil company, holds 20 percent and ConocoPhillips 18 percent.

“The announcement of Tiber confirms the very positive prospectivity of the Lower Tertiary geological play in the locale,” Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh, said. The news is “positive, and potential for more upside still” possible.

[Viva Las Espuelas]

but, but, but, but, but, but, but, but, but, but, but, but, but..........................

[coyotes_geek]

:tu

[ChumpDumper]

So what does this mean for gas prices?

[johnsmith]

So what does this mean for gas prices?

The article I read on this said that this discovery could realistically lower gas price right now..............but then I looked at the market and oil was up .15, so what the fuck did the article know?

[coyotes_geek]

It's the production, not the find, that will lower gas prices. And the article suggests that the production is still years out.

[johnsmith]

It's the production, not the find, that will lower gas prices. And the article suggests that the production is still years out.

Funny thing about this is that oil is such a speculative market, it seems odd to me that this wouldn't have an immediate impact...........I understand why it won't, but it seems strange.

[johnsmith]

However, oil doesn't matter to Americans right now, it won't matter again until the media tells us that it matters..........in the meantime, it's healthcare, healthcare, healthcare.................

[Nbadan]

It's the production, not the find, that will lower gas prices. And the article suggests that the production is still years out.

Not to mention that this output will be a drop in the required output barrel by 2020 at normal growth consumption rates.

[coyotes_geek]

Funny thing about this is that oil is such a speculative market, it seems odd to me that this wouldn't have an immediate impact...........I understand why it won't, but it seems strange.

There's so many factors at play and the price movement is a summation of all of them. Maybe oil would be up .50 today instead of .15 today had the news not broke.


Not to mention that this output will be a drop in the required output barrel by 2020 at normal growth consumption rates.

Good point.

[clambake]

maybe they'll sell it to the US for a good price!

[DarrinS]

maybe they'll sell it to the US for a good price!


They probably could if they could refine it quicker.


A new refinery hasn't been built in the US since 1976.

[ChumpDumper]

They probably could if they could refine it quicker.


A new refinery hasn't been built in the US since 1976.Are the refineries working at full capacity now?

[DarrinS]

Are the refineries working at full capacity now?


Most of them are at 90-95% utilization rate, so I would say yes.

[ChumpDumper]

Refiners tied their highest utilization rate for the year last week, operating at 87.2% of capacity.

http://online.wsj.com/article/BT-CO-20090902-707980.html

I would say no.

[clambake]

don't sweat it darrins. trying to find a youtube about refinery production is no easy business.

[Nbadan]

Seriously, grow up..

Our failure to be innovative in the creation of energy sources other than fossil fuels-based is one of the greatest threats to the peaceful stability of this earth........and don't give me this shit about not having the technology, it doesn't exist because there is no political will!

[SpurNation]

Seriously, grow up..

Our failure to be innovative in the creation of energy sources other than fossil fuels-based is one of the greatest threats to the peaceful stability of this earth........and don't give me this shit about not having the technology, it doesn't exist because there is no political will!

Totally agree. Many people don't realise that Ford first built his cars to run on biofuel.

[DarrinS]

Refiners tied their highest utilization rate for the year last week, operating at 87.2% of capacity.

http://online.wsj.com/article/BT-CO-20090902-707980.html

I would say no.


"Weekly US oil data shows that refineries on average used 87.2% of their processing capacity last week, matching the high for the year, first set in the week ended July 10."


My numbers were in the ballpark. Existing refineries would be hard-pressed to handle a large supply from the gulf.


Keep up that hard-hitting research, Chump. :lol

[coyotes_geek]

Seriously, grow up..

Our failure to be innovative in the creation of energy sources other than fossil fuels-based is one of the greatest threats to the peaceful stability of this earth........and don't give me this shit about not having the technology, it doesn't exist because there is no political will!

There's no failure to innovate and it's not about a lack of political will. It's simple economics. Oil is cheap. Alternative sources are not. Simple as that. When oil gets expensive again, alternative sources will be pursued with more vigor. For better or worse, the global marketplace will dictate when that occurs. Politicians are pretty much powerless in that regards.

[LnGrrrR]

there's no failure to innovate and it's not about a lack of political will. It's simple economics. Oil is cheap. Alternative sources are not. Simple as that. When oil gets expensive again, alternative sources will be pursued with more vigor. For better or worse, the global marketplace will dictate when that occurs. Politicians are pretty much powerless in that regards.

+1

[Nbadan]

There's no failure to innovate and it's not about a lack of political will. It's simple economics. Oil is cheap. Alternative sources are not. Simple as that. When oil gets expensive again, alternative sources will be pursued with more vigor. For better or worse, the global marketplace will dictate when that occurs. Politicians are pretty much powerless in that regards.

That would be true if we were only looking for short-term solutions...but we are reaching a point were the total oil output capacity is used up without substantial added costs, and then what? $200/b oil...

[coyotes_geek]

That would be true if we were only looking for short-term solutions...but we are reaching a point were the total oil output capacity is used up without substantial added costs, and then what? $200/b oil...

When oil hits $200 then all of us will be looking for ways to cut back on how much of it we use. Maybe we get lucky though and someone figures out how to make one or more of the alternatives more cost competitive before oil gets that high. Either way, the solution is going to be market driven, not politician driven.

[ChumpDumper]

"Weekly US oil data shows that refineries on average used 87.2% of their processing capacity last week, matching the high for the year, first set in the week ended July 10."


My numbers were in the ballpark. Existing refineries would be hard-pressed to handle a large supply from the gulf.


Keep up that hard-hitting research, Chump. :lolI said they were not at capacity.

I was right.

You weren't.

You work under the mistaken belief that refineries work at 100% capacity if there is enough oil available to be refined.

They don't.

Keep up that hard-hitting ignorance, Darrin! :tu

[SpurNation]

When oil hits $200 then all of us will be looking for ways to cut back on how much of it we use. Maybe we get lucky though and someone figures out how to make one or more of the alternatives more cost competitive before oil gets that high. Either way, the solution is going to be market driven, not politician driven.

I agree with most of this content. But there is the fact that a market driven economy is also based on the politicians subcomed to the financures of their elections.

What was being discussed in this last election? The ability to capitalize on alternative sources of energy. Not to be burdened with a petroleum based energy system.

This happened in 1972 during the gas shortage crisis. Many alternative means were being introduced. Some making strong headway into our energy choices. Low and behold....petroleum costs drastically reduced to accomodate the already prevalent combustionable automobile.

Why would it be a viable solution? Allow other means of gathering energy to fuel our homes and factories and let the petroleum industry be the source of fuel for our growing need to transport. Regulate our energy sources to accomodate a specific need.

This country has unlimited resources to providing energy to all it's fuel dependant needs. Why not allow all to equally be part of the solution instead of just one to be dominant?

[coyotes_geek]

I agree with most of this content. But there is the fact that a market driven economy is also based on the politicians subcomed to the financures of their elections.

What was being discussed in this last election? The ability to capitalize on alternative sources of energy. Not to be burdened with a petroleum based energy system.

This happened in 1972 during the gas shortage crisis. Many alternative means were being introduced. Some making strong headway into our energy choices. Low and behold....petroleum costs drastically reduced to accomodate the already prevalent combustionable automobile.

Why would it be a viable solution? Allow other means of gathering energy to fuel our homes and factories and let the petroleum industry be the source of fuel for our growing need to transport. Regulate our energy sources to accomodate a specific need.

This country has unlimited resources to providing energy to all it's fuel dependant needs. Why not allow all to equally be part of the solution instead of just one to be dominant?

It's not about someone out there giving permission. It's about the economics. The day someone figures out how to deliver an energy alternative at a price that's competitive with oil, that source will start to balance things out immediately.

[Extra Stout]

They probably could if they could refine it quicker.


A new refinery hasn't been built in the US since 1976.
That talking point is one of the irreedemably stupid ones I can never let pass.

OIL COMPANIES EXPAND THEIR EXISTING REFINERIES. BUILDING ALL-NEW ONES IS POINTLESSLY EXPENSIVE.

[RandomGuy]

but, but, but, but, but, but, but, but, but, but, but, but, but..........................

....what about the existing oil fields that are currently in the end stages of their productivity?

Nice find. There will be more in the years ahead.

The really big "but" in this case is:

but, they are still not finding it faster than we are using it up.

Repeat after me, kids:

Declining supplies and increasing demand makes the price point go up.

I now return you to your regulary scheduled anti-environmentalist diatribes, please carry on.

[RandomGuy]

It's not about someone out there giving permission. It's about the economics. The day someone figures out how to deliver an energy alternative at a price that's competitive with oil, that source will start to balance things out immediately.

Indeed, and as oil gets RELATIVELY more expensive that bar will be easier and easier to clear.

I doubt oil will be fully replaced as an energy source in my lifetime, but humanity will get an ever decreasing share of its overall energy needs from it, and that shrinkage will accelerate.

[RandomGuy]

That talking point is one of the irreedemably stupid ones I can never let pass.

OIL COMPANIES EXPAND THEIR EXISTING REFINERIES. BUILDING ALL-NEW ONES IS POINTLESSLY EXPENSIVE.

Indeed. If you read the financial statements and annual reports, you can garner that although no new refinery has been built since then, refining capacity is actually greater than it used to be. Expansions and gains in efficiency.

[boutons_deux]

"boost output in the region by 50 percent to 600,000 barrels of oil equivalent a day after 2020"

so now production in the region is 400,000 b/d, and this find boosts that to 600,000 b/d, or +200,000 b/d.

total world production is over 80,000,000 b/d.

So, in 10 years, this find will boost production by 0.02% per day. "giant" :lol

[DarrinS]

That talking point is one of the irreedemably stupid ones I can never let pass.

OIL COMPANIES EXPAND THEIR EXISTING REFINERIES. BUILDING ALL-NEW ONES IS POINTLESSLY EXPENSIVE.



Fair enough. BP better start expanding their Texas City refinery.


At least you made a better point than Chump, which was that 87.5% is not very close to 100%. I guess he fills his tank when the needle gets halfway between full and 3/4 full.

[TeyshaBlue]

"boost output in the region by 50 percent to 600,000 barrels of oil equivalent a day after 2020"
so now production in the region is 400,000 b/d, and this find boosts that to 600,000 b/d, or +200,000 b/d.
total world production is over 80,000,000 b/d.

So, in 10 years, this find will boost production by 0.02% per day. "giant" :lol

Actually, closer to .025%. For a single find to have any measurable impact is pretty major.

[Wild Cobra]

At least you made a better point than Chump, which was that 87.5% is not very close to 100%. I guess he fills his tank when the needle gets halfway between full and 3/4 full.
Considering the economic slump, that 7/8th capacity sounds right. When we were doing better, we were between 90% to 95% capacity because we were using more oil. It's also possible that some refinery expansion has occurred as well.

I'm not to worried about refining capacity. If we need more, they will build it. One of the things a supply and demand economy produces. When more capacity is needed, it is the company that expands refining capacity that will get the increased market share.

[Yonivore]

Did more dinosaurs die or something?

[ChumpDumper]

Fair enough. BP better start expanding their Texas City refinery.


At least you made a better point than Chump, which was that 87.5% is not very close to 100%. I guess he fills his tank when the needle gets halfway between full and 3/4 full.


Considering the economic slump, that 7/8th capacity sounds right. When we were doing better, we were between 90% to 95% capacity because we were using more oil. It's also possible that some refinery expansion has occurred as well.

I'm not to worried about refining capacity. If we need more, they will build it. One of the things a supply and demand economy produces. When more capacity is needed, it is the company that expands refining capacity that will get the increased market share.:lol Darrin gets owned by Wild Cobra of all people.

Also get this through your thick skull, Darrin -- that 87.5% figure is the highest at only two points this year. The rest of the time it has always been LOWER.

Why is that?

[clambake]

If you need me, I'll be on youtube.....while I'm at work

[boutons_deux]

"When more capacity is needed"

do nothing, restrict supply, and pocket 10s of $Bs for doing nothing.

How's everything else in your Ivory Tower surrouned by an ideological fog?