BP finds 'giant' oil well

3 September 2009

04 September 2009

BP's "giant" oil discovery in the Gulf of Mexico could result in lower prices for buyers, according to industry experts.

The UK company announced last week that it had drilled its Tiber Prospect well to a depth of 35,055ft, making it one of the deepest drilled to date. Oil was found in multiple reservoirs.

Further analysis will be needed to determine the size and commercial value of the discovery, BP said, although a company spokesman said the industry definition for a "giant" discovery means it is likely to produce a total of at least 250 million barrels of oil.

John Westwood, chairman of analysts Douglas-Westwood, said the find could give way to more investment in oil exploration, meaning oil prices are "not likely to go up as much" in the future.

But he warned that the well is a "substantial undertaking" and could take up to 10 years to enter full production.

Elsewhere, John Hall, chairman of energy procurement consultancy John Hall Associates (JHA), said the discovery was good news for buyers in the US who will have to rely less on Opec supply during future "hurricane seasons".

"This is a big area of investment and it shows that the [exploration] technology we have today is streets ahead of anything we had previously," Hall said.

BP is the largest producer of oil and gas in the Gulf of Mexico, with net production equivalent to more than 400,000 barrels of oil a day.

JHA was recently acquired by EnergyQuote. The company will operate under the EnergyQuote brand (Web news, 24 August).

SMsep2009

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