Huge Oil Reserve Found In The Gulf

Chevron Thinks It Might Have Found As Much As 15 Billion Barrels

(CBS/AP)  Results from a deep-water test well in the Gulf of Mexico suggest a new pool of oil and gas that could boost U.S. reserves by as much as 50 percent.

Chevron Corp. on Tuesday estimated the 300-square-mile region where its test well sits could hold between 3 billion and 15 billion barrels of oil and natural gas liquids. Analysts are calling it the most significant domestic discovery since Alaska's Prudhoe Bay more than a generation ago.

It will take many years and tens of billions of dollars to bring the oil to market, but the discovery carries particular importance for the entire industry at a time when Western oil and gas companies are finding fewer opportunities in politically unstable parts of the world, including the Middle East, Africa and Russia.

The proximity of the Gulf of Mexico to the world's largest oil consuming nation makes it especially attractive. And it could bring pressure on Florida and other states to relax limits they have placed on drilling in their offshore waters for environmental and tourism reasons.

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CBS News correspondent Anthony Mason checks on the oil industry's efforts to find more black gold at the bottom of the Gulf of Mexico.

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The country's reserves currently are more than 29 billion barrels of oil equivalent, according to the U.S. Energy Department. But the U.S. imports more than half of its oil from countries with much larger reserves, such as Saudi Arabia whose reserves are nearly 10 times those of the United States.

Chevron's well, called "Jack 2," was drilled about 5.3 miles below sea level. Chevron has a 50 percent stake in the field, while partners Statoil ASA of Norway and Devon Energy Corp. of Oklahoma City own 25 percent each.

During the test, the Jack 2 well sustained a flow rate of more than 6,000 barrels of oil per day, but analysts and executives believe the payoff could be much larger than that.

The financial implications of the prospect are most significant for independent oil and gas producer Devon, which is the smallest of the three partners. Devon's shares soared more than 10 percent on the New York Stock Exchange.

"This could not have happened in a better place," Devon CEO Larry Nichols said in a conference call with analysts.

The successful test well does not mean a huge supply of cheap oil will hit the market anytime soon.

Oppenheimer & Co. analyst Fadel Gheit estimated that the first production for the Chevron-led partnership might not come on line until after 2010, depending on how many more test wells the companies drill. That said, many companies, including BP PLC, Exxon Mobil Corp. and Anadarko Petroleum Corp., stand to benefit from their own projects in the so-called lower tertiary, a rock formation that is 24 million to 65 million years old.

"They may be the first ones to hit the jackpot, but if the current thinking is correct, this is only a beginning," Gheit said.

The well was drilled in the Walker Ridge area of the Gulf, about 270 miles southwest of New Orleans and 175 miles off the coast. It followed up a discovery made by Chevron in 2004.

San Ramon, Calif.-based Chevron said the well set a variety of records, including the deepest well successfully tested in the Gulf of Mexico. Chevron said the well was drilled more than 20,000 feet under the sea floor below 7,000 feet of water for a total depth of 28,175 feet.

Shares of Devon rose $7.99, or 12.5 percent, to close at $72.14 on the New York Stock Exchange, above the top end of the stock's 52-week range of $48.94 to $70.35. Shares of Chevron rose $1.51, or 2.3 percent, to $66.34.

[eng_buddyh]

Where in the Gulf Coast is the field located ?

[eng_buddyh]

Where in the Gulf Coast is the field located ?

[eng_buddyh]

Where in the Gulf Coast is the field located ?

[eng_buddyh]

Where in the Gulf Coast is the field located ?

[eng_buddyh]

Where in the Gulf Coast is the field located ?

[eng_buddyh]

Where in the Gulf Coast is the field located ?

[eng_buddyh]

Where in the Gulf Coast is the field located ?

[eng_buddyh]

Where in the Gulf Coast is the field located ?

[valerie928]

Bush was hiding it!!!

[clestes-2009]

So, in another kneeling at the alter of BIG OIL, we are going to spend billions of dollars, destroy the FL tourist industry, endanger or wipe out species of fish and wildlife, all to support the oil monkey on our back.

The same money could be spent on alternative fuel source research and get the oil monkey off our back.

It makes me sick.

[demssick]

Great news! It goes to show that the alarmist who say the world is running out of oil are telling a big lie. Leave it to the good old American free market to solve our problems in regards to energy. Goverment and the extremist enviromental wackos need to get the hell out of the way and the free market will find a way to solve the problem.

[bunionbabe]

Very convenient...this is just the industry paying back the Republican party for their huge tax breaks. And, an excuse to once again destroy the environment. Who can prove this is true? Even if it is, there is not enough oil there to be of any real signficiance.

[zykracosmos]

Whoop-te-do! Tell me why I should celebrate oil companies finding sources that would take tens of billions of dollars to develop, all with tax breaks from the American people, to develop an expensive source of oil which is not guaranteed to be sold to Americans anyway. They can ship it to China if they choose to, just like the companies (mostly foreign owned by the way) that control the oil flowing through the Alaska pipeline (our oil?) send it to Korea or anywhere they like, and sometimes defer it to foreign markets at below market prices just to drive up California's prices (court documents available). Anyway, the stupidity of this is especially astounding considering NASA's chief climate scientist tells us we must make major changes towards non-fossil fuel sources within ten years or we will be on a runaway course to climate catastrophe. Now I guess the guy celebrating below me must have stock in the oil industry.. otherwise he has nothing to get excited about. For the rest of us, this just means that it will be that much harder to do what we absolutely have to do.. set up an energy grid in this country that is carbon-free.

[three-o-six]

Why is it that only liberals complain about good news? No one believes the environmentalists any more, so lets go get that oil. Maybe we could even depress the market and ruin the economies of those nations that have been giving use the oil squeeze.

[noomgod]

I guess the top Chevron oil execs will get a nice bonus this year.Remember the oil companies have record gas prices with record profit. Just a thing to make you go hmmmm.

[getcentered]

This story is a plant, it's psy-ops. Don't let the optimism fool you. THERE IS FAR MORE OIL IN THE WORLD THEN WE SHOULD EVER HOPE TO BURN. The oil companies use "self-limiting discovery" to keep the price up and the costs down. Don't ever let someone convince you into thinking that we could run out of oil anytime soon. The point is, that if we continue to burn up this oil then we won't have much of an atmosphere or access to a breath of fresh air. The real questions are these:
1. Why do we still use technology from the 1800's to get around?
2. Why do we put AIR IN OUR TIRES?
The answers are the same. We "need" to be high on money and low on cash.
The days are long but the weeks are fast. Don't let another 10th of your life past by with out you asking yourself what you can do to better our world. VOTE! VOTE! VOTE!

[xomox-2009]

My, I am surprised how uneducated people are
concerning the domestic oil and gas industry.
This is a major discovery. "$2.89 for a gallon
of gas is unheard of, but I will pay $4.00 for
my coffee at Starbucks and be seen talking on my cell phone" Gen X's. . . . get a clue.

[loganandcody]

the lord has help us by the gas prices going down finally woo woo its bout time we find something. amen

[loganandcody]

the lord has help us out alot woo woo thank god the prices r going down

[loganandcody]

logan speaking, does it seem that Bushes ears wiggle when he lies. Im suprised he did not hide it to sell to forein contries. REBULICANS SUCK ***