Chevron, BP make oil discovery in Gulf of Mexico

10 23, 2014 by Fuel Fix

Chevron and BP have made an oil discovery in one of the deepest regions the industry has taken on in the Gulf of Mexico, the companies said Thursday.

The oil majors said the discovery well, in the Keathley Canyon Block 10 located about 180 miles from the Louisiana coast, “encountered significant oil pay,” but they did not say how much oil they estimated is in the ancient Paleogene sandstone formation.

“More tests are being conducted on the well and additional appraisal activity will be needed to determine the extent of the resource,” the companies said.

The discovery well was drilled in nearly 4,000 feet of water and drilled to more than 30,000 feet deep.

Chevron operates the Guadalupe prospect in the Gulf of Mexico, with a 42.5 percent stake. BP also has a 42.5 percent stake, and Venari Resources has a 15 percent stake.

Chevron started drilling the Guadalupe well in June.

Richard Morrison, regional president of BP’s Gulf of Mexico business, said in a written statement the Paleogene trend is becoming “an area of increasing importance to the future of the Gulf of Mexico and to America’s energy security.”

The Paleogene trend in the Gulf has yielded three other oil discoveries for BP since 2006. It’s a region that will take heftier equipment than the industry has at its disposal to combat massive reservoir pressure in the deep waters.

Chevron pumped about 143,000 barrels of crude and 347 million cubic feet of natural gas a day in the Gulf last year.

Chevron shares rose $2.28 in early trading Thursday to $116.28 and BP shares increased 58 cents to $42.14 on the New York Stock Exchange.

“The discovery further demonstrates Chevron’s exploration capabilities,” George Kirkland, Chevron’s vice chairman and executive vice president for upstream, said in a statement.

Added Jay Johnson, Chevron’s senior vice president for upstream: “Guadalupe builds on our already strong position in the deepwater U.S. Gulf of Mexico, a core focus area where we expected significant production growth over the next two years.”