BP (BP) said it has made a “giant” discovery of crude oil in its Tiber Prospect in the Gulf of Mexico. The well was drilled to a depth of over 35,000 feet and the ocean floor at that spot is about two thousand feet under water.
Estimates are that the field could hold three billion barrels of oil, if drillers can get to it. That makes the find seem similar to one by Petrobras (PBR) in the Tupi field off the coast of Brazil.
The Petrobras deposit is as large as eight billion barrels. The Tupi field is 7,000 feet below the ocean’s surface. Beyond that Petrobras will have to drill though another 17,000 feet of sand and rock.
There appear to be an acceleration in the number of new discoveries of very large oil reserves that might, over time, replace the aging fields in place like Saudi Arabia and Russia. What is not clear is whether any technology that exists today or will exist in the next decade will be sophisticated enough to allow for a reasonable return on investment.
BP’s shares are up 4% to $52.50, not far from their 52-week high of $56.69. The new deposit may look good on paper, but exploiting the discovery is far from being a sure thing.
Douglas A. McIntyre
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