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BP’s ‘Giant’ Discovery Gives the Gulf of Mexico New Life

I am trying to climb out from under an avalanche of correspondence, and I also hope to have the “Niches” article done by Monday morning. Until then, the latest from Money Morning on BP’s new oil discovery. As I previously explained topical Money Morning content will be featured here from time to time. As always, normal caveats apply: I am not an investment advisor. I don’t endorse any specific stocks mentioned in the following story nor the ad at the end of the story; these stories are meant to spur discussion.

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BP’s ‘Giant’ Discovery Gives the Gulf of Mexico New Life

By Jason Simpkins

Managing EditorMoney Morning

BP PLC (NYSE ADR: BP) yesterday (Wednesday) announced a “giant” oil discovery in the Gulf of Mexico that may contain more than 3 billion barrels of oil. The find is evidence of the Gulf’s resurrection as a major oil producer, as well as the great lengths – or depths – to which major oil companies must go to find vibrant wells.

The well, known as the Tiber Prospect, is one of the deepest wells ever drilled with a total depth of about 35,055 feet, or 6½ miles. An appraisal will be required to determine the size and potential commercial value of discovery, but preliminary estimates suggest the field is bigger than Kaskida, a 2006 discovery that boasted 3 billion barrels of oil equivalent (boe).

“Tiber represents BP’s second material discovery in the emerging Lower Tertiary play in the Gulf of Mexico, following our earlier Kaskida discovery,” said Andy Inglis, BP’s head of exploration and production. “These material discoveries together with our industry leading acreage position support the continuing growth of our deepwater Gulf of Mexico business into the second half of the next decade.”

BP is already the largest producer of oil and gas in the Gulf of Mexico, generating about 400,000 boe/day. But once they start producing, the Tiber and Kaskida wells could boost the company’s output in the region to 650,000 boe/day.

BP did not say when the Tiber well would begin producing oil, but analysts don’t expect the field to start pumping until at least 2014. That seems optimistic, however, as BP’s last large-scale development in the Gulf – the Thunder Horse field – took nearly twice as long. That well was discovered in 1999 but didn’t start producing until just last year.

Of course, the Thunder Horse platform offers a compelling case study for the revival of oil exploration and development in the Gulf of Mexico – once referred to as the “Dead Sea” by oil majors who believed the region was tapped out.

Thunder Horse is ramping up its production to 300,000 barrels per day (bpd), which makes it the No. 2 U.S. producer behind Alaska’s Prudhoe Bay, BusinessWeek reported.

In fact, Thunder Horse and projects like it have added about 1.2 million bpd to total U.S. output. U.S. crude oil production is expected to rise this year for the first time in nearly two decades. In the first seven months, the country has averaged 5.26 million bpd, the highest for the January-to-July period in four years, according to the American Petroleum Institute, an industry group.

The deep waters of the Gulf of Mexico are now “one of the few bright spots in global oil production” Bob MacKnight, an analyst at PFC Energy told BusinessWeek.

The Gulf now accounts for about 25% of domestic oil production and 15% of natural gas output through about 3,800 offshore production platforms, according to the U.S. Minerals Management Service.

Of course, that production has come at a high cost. Exploration wells cost up to $200 million to bring onstream, and actual offshore platforms are even more expensive. Thunder Horse cost more than $1 billion to build and another $250 million more to repair after Hurricane Dennis knocked the massive structure on its side.

Still, operating in U.S. waters in the Gulf of Mexico is easier and less costly taking on projects in countries such as Venezuela, Africa, Iraq, and Russia where political skirmishes and civil unrest often lead to costly setbacks.

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Money Morning Editor’s Note

Why Is Beijing Investing $200 Billion in One Company? The answer is simple. This rail company hauls 25% of the world’s freight – but it only has 6% of the world’s track. Right now, freight supply is 65% shy of demand. Sales for this company have grown on average 47% over the last five year. And now, with a $200 billion infusion, it’s about to jump even higher. Estimates show the potential gains at 356%. Click here for the full report.

September 5, 2009 Posted by | BP, Gulf of Mexico, Money Morning, oil discoveries | 14 Comments

Brazil’s New Oil Discovery

You may have seen in the news that Brazil has made a new oil discovery. It is always hard to judge how much is hyperbole, but they are excited about it:

Offshore oil discovery could make Brazil major petroleum exporter

RIO DE JANEIRO, Brazil: A huge offshore oil discovery could raise Brazil’s petroleum reserves by a whopping 40 percent and boost this country into the ranks of the world’s major exporters, officials said.

The government-run oil company Petroleo Brasileiro SA, or Petrobras, said the new “ultra-deep” Tupi field could hold as much as 8 billion barrels of recoverable light crude, sending Petrobras shares soaring and prompting predictions that Brazil could join the world’s “top 10” oil producers.

“Brazil’s reserves will lie somewhere between those of Nigeria and those of Venezuela,” Gabrielli said at a news conference.

Petrobras says the Tupi field, off Brazil’s southeastern Atlantic coast, has between 5 billion and 8 billion barrels — equivalent to 40 percent of all the oil ever discovered in Brazil.

Brazil is a country very well-positioned for worldwide energy shortages. They don’t use much oil, they have lots of oil, and they are efficient producers of ethanol.

November 9, 2007 Posted by | Brazil, oil discoveries, oil reserves | 6 Comments

Brazil’s New Oil Discovery

You may have seen in the news that Brazil has made a new oil discovery. It is always hard to judge how much is hyperbole, but they are excited about it:

Offshore oil discovery could make Brazil major petroleum exporter

RIO DE JANEIRO, Brazil: A huge offshore oil discovery could raise Brazil’s petroleum reserves by a whopping 40 percent and boost this country into the ranks of the world’s major exporters, officials said.

The government-run oil company Petroleo Brasileiro SA, or Petrobras, said the new “ultra-deep” Tupi field could hold as much as 8 billion barrels of recoverable light crude, sending Petrobras shares soaring and prompting predictions that Brazil could join the world’s “top 10” oil producers.

“Brazil’s reserves will lie somewhere between those of Nigeria and those of Venezuela,” Gabrielli said at a news conference.

Petrobras says the Tupi field, off Brazil’s southeastern Atlantic coast, has between 5 billion and 8 billion barrels — equivalent to 40 percent of all the oil ever discovered in Brazil.

Brazil is a country very well-positioned for worldwide energy shortages. They don’t use much oil, they have lots of oil, and they are efficient producers of ethanol.

November 9, 2007 Posted by | Brazil, oil discoveries, oil reserves | Comments Off on Brazil’s New Oil Discovery

Brazil’s New Oil Discovery

You may have seen in the news that Brazil has made a new oil discovery. It is always hard to judge how much is hyperbole, but they are excited about it:

Offshore oil discovery could make Brazil major petroleum exporter

RIO DE JANEIRO, Brazil: A huge offshore oil discovery could raise Brazil’s petroleum reserves by a whopping 40 percent and boost this country into the ranks of the world’s major exporters, officials said.

The government-run oil company Petroleo Brasileiro SA, or Petrobras, said the new “ultra-deep” Tupi field could hold as much as 8 billion barrels of recoverable light crude, sending Petrobras shares soaring and prompting predictions that Brazil could join the world’s “top 10” oil producers.

“Brazil’s reserves will lie somewhere between those of Nigeria and those of Venezuela,” Gabrielli said at a news conference.

Petrobras says the Tupi field, off Brazil’s southeastern Atlantic coast, has between 5 billion and 8 billion barrels — equivalent to 40 percent of all the oil ever discovered in Brazil.

Brazil is a country very well-positioned for worldwide energy shortages. They don’t use much oil, they have lots of oil, and they are efficient producers of ethanol.

November 9, 2007 Posted by | Brazil, oil discoveries, oil reserves | Comments Off on Brazil’s New Oil Discovery

Brazil’s New Oil Discovery

You may have seen in the news that Brazil has made a new oil discovery. It is always hard to judge how much is hyperbole, but they are excited about it:

Offshore oil discovery could make Brazil major petroleum exporter

RIO DE JANEIRO, Brazil: A huge offshore oil discovery could raise Brazil’s petroleum reserves by a whopping 40 percent and boost this country into the ranks of the world’s major exporters, officials said.

The government-run oil company Petroleo Brasileiro SA, or Petrobras, said the new “ultra-deep” Tupi field could hold as much as 8 billion barrels of recoverable light crude, sending Petrobras shares soaring and prompting predictions that Brazil could join the world’s “top 10” oil producers.

“Brazil’s reserves will lie somewhere between those of Nigeria and those of Venezuela,” Gabrielli said at a news conference.

Petrobras says the Tupi field, off Brazil’s southeastern Atlantic coast, has between 5 billion and 8 billion barrels — equivalent to 40 percent of all the oil ever discovered in Brazil.

Brazil is a country very well-positioned for worldwide energy shortages. They don’t use much oil, they have lots of oil, and they are efficient producers of ethanol.

November 9, 2007 Posted by | Brazil, oil discoveries, oil reserves | Comments Off on Brazil’s New Oil Discovery

Brazil’s New Oil Discovery

You may have seen in the news that Brazil has made a new oil discovery. It is always hard to judge how much is hyperbole, but they are excited about it:

Offshore oil discovery could make Brazil major petroleum exporter

RIO DE JANEIRO, Brazil: A huge offshore oil discovery could raise Brazil’s petroleum reserves by a whopping 40 percent and boost this country into the ranks of the world’s major exporters, officials said.

The government-run oil company Petroleo Brasileiro SA, or Petrobras, said the new “ultra-deep” Tupi field could hold as much as 8 billion barrels of recoverable light crude, sending Petrobras shares soaring and prompting predictions that Brazil could join the world’s “top 10” oil producers.

“Brazil’s reserves will lie somewhere between those of Nigeria and those of Venezuela,” Gabrielli said at a news conference.

Petrobras says the Tupi field, off Brazil’s southeastern Atlantic coast, has between 5 billion and 8 billion barrels — equivalent to 40 percent of all the oil ever discovered in Brazil.

Brazil is a country very well-positioned for worldwide energy shortages. They don’t use much oil, they have lots of oil, and they are efficient producers of ethanol.

November 9, 2007 Posted by | Brazil, oil discoveries, oil reserves | Comments Off on Brazil’s New Oil Discovery