British Petroleum's oil discovery in the Gulf of Mexico

Discovery of Oil in the Gulf of Mexico

According to a press release issued on September 2, 2009, British Petroleum (BP) has announced the discovery of a huge oil deposit at its Tiber Prospect in the Gulf of Mexico. This particular well, located in the Keathley Canyon block 102 some 250 miles from the city of Houston, Texas, is some 4,132 feet below the surface with the well itself reaching a depth of 35,055 feet, "making it one of the deepest wells ever drilled by the oil and gas industry" ("BP Announces," 2009, Internet). Exactly how much oil is in this reservoir is not currently known, but BP officials estimate that it holds some three billion barrels. If this estimate turns out to be true, it could make a huge difference in the amount of oil imported by the United States, thus lowering not only the cost of oil in the U.S. But also the costs associated with gasoline for the average American consumer.

Edward Gismatullin, a reporter for the Bloomsberg News Agency, writes that this discovery has boosted oil output in the region of the Gulf of Mexico "by 50% to 600,000 barrels. . . equivalent a day after 2020" and is about equal to a year's output of oil from Saudi Arabia, the largest member of OPEC, and "close to matching the UK's entire proven reserves" (2009, Internet). As to the oil itself, British Petroleum spokesman Robert Wine has stated this discovery "is a whole new geological play," a reference to the oil being held in what is known in the industry as the Lower Tertiary or Paleogene, a 65 million year-old formation almost as far down in the Gulf of Mexico as Mount Everest is high and a region previously believed by petro-geologists as unreachable (Gismatullin, 2009, Internet).

For some specialists in the oil industry, this discovery by British Petroleum comes as a major surprise, due to the fact that the Gulf of Mexico has long been considered as a "dead sea," a reference to a prior belief that the gulf "had already offered up all of its big discoveries;" however, "it is now again front and center for petroleum explorers" like BP and a number of other major U.S. oil companies (Gold, 2009, Internet). Currently, the costs associated with drilling for oil in the Gulf of Mexico is quite high, reaching around $200 million dollars for each well drilled in this region. Of course, this does not include such amenities as drilling exploratory wells, the cost of pipelines and floating facilities, such as oil platforms from which most of the drilling takes place. However, several important advantages linked to this discovery and to similar oil endeavors is that oil companies "will have to pay the U.S. less taxes, royalties, oil payments and other levies" as compared to drilling for oil within the national water boundaries of other oil-producing nations" (Gold, 2009, Internet), many of whom are members of OPEC.