This was a giant field and the third biggest find in the US after Prudhoe Bay, also a BP find and the older Spraberry Trend in West Texas. Ostensibly, quelling oil "volatility" ie reaping profits from oil price spikes is the impetus behind these kinds of risky projects. But, this field could not have been found or developed without the advent of deepwater drilling. BP used the Deepwater Horizon rig that was also used just months later for the deepwater drilling in nearby Macondo Prospect in Mississippi Canyon where tragedy struck.
BP announced today a giant oil discovery at its Tiber Prospect in the deepwater US Gulf of Mexico.
The well, located in Keathley Canyon block 102, approximately 250 miles (400 kilometres) south east of Houston, is in 4,132 feet (1,259 metres) of water. The Tiber well was drilled to a total depth of approximately 35,055 feet (10,685 metres) making it one of the deepest wells ever drilled by the oil and gas industry. The well found oil in multiple Lower Tertiary reservoirs. Appraisal will be required to determine the size and commerciality of the discovery.
"Tiber represents BP’s second material discovery in the emerging Lower Tertiary play in the US Gulf of Mexico, following our earlier Kaskida discovery," said Andy Inglis, chief executive, Exploration and Production. "These material discoveries together with our industry leading acreage position support the continuing growth of our deepwater Gulf of Mexico business into the second half of the next decade."
Tiber is operated by BP (NYSE: BP), with a 62 per cent working interest with co-owners Petrobras (NYSE: PBR/PBRA, 20 per cent) and ConocoPhillips (NYSE: COP, 18 per cent).
Transocean Ltd. (NYSE: RIG) announced that its ultra-deepwater semisubmersible rig Deepwater Horizon recently drilled the deepest oil and gas well ever while working for BP and its co-owners on the Tiber well in the U.S. Gulf of Mexico. Working with BP, the Transocean crews on the Deepwater Horizon drilled the well to 35,050 vertical depth and 35,055 feet measured depth (MD), or more than six miles, while operating in 4,130 feet of water.
This impressive well depth record reflects the intensive planning and focus on effective operations by BP and the drilling crews of the Deepwater Horizon," said Robert L. Long, Transocean Ltd.’s Chief Executive Officer. "Congratulations to everyone involved."
These achievements are the latest in Transocean’s history of world and other records dating back to the 1950s. In 2005, the ultra-deepwater drillship Discoverer Spirit set the record for the longest Gulf of Mexico oil and gas well at 34,189 feet, MD. Most recently, the Transocean jackup GSF Rig 127 drilled the industry’s longest extended-reach well in 2008 while working for Maersk Oil Qatar AS at 40,320 feet MD with a 35,770-foot horizontal section. The well was drilled offshore Qatar in 36 days and was incident-free.
Transocean also holds the current world water-depth record of operating in 10,011 feet of water set while working for Chevron in the U.S. Gulf of Mexico.
The Deepwater Horizon, placed into service in 2001, is a dynamically positioned ultra-deepwater semisubmersible rig capable of working in water depths of up to 10,000 feet.
BP Plc’s “giant” oil discovery beneath the Gulf of Mexico shows the lengths producers are having to go to replace dwindling reserves because many of the world’s largest fields remain off-limits.
Restricted access to deposits in the Middle East, Russia and Venezuela and advances in technology have spurred a shift toward harder-to-access reserves that would once have been unreachable. BP has pushed back the frontiers of exploration in North America in the past. It discovered Alaska’s Prudhoe Bay field, still the biggest oil field in the U.S., in 1969…
Caution Urged
It could be years before any oil is pumped given the challenges posed by BP’s latest discovery, Stephen Schork, president of the Schork Group, said in an interview with Bloomberg Television yesterday.
Tiber lies in a geological formation known as the lower Tertiary, a layer of rocks created 24 million to 65 million years ago.
“It is a huge discovery, but there is a long time to go,” Aymeric de Villaret, a Paris-based analyst at Societe Generale, said in a phone interview.
Tiber was drilled 250 miles (400 kilometers) southeast of Houston in 4,132 feet (1,259 meters) of water, reaching almost 31,000 feet beneath the seafloor. Transocean Ltd., the world’s largest offshore driller, used the Deepwater Horizon semi- submersible rig for the discovery. BP, which hasn’t disclosed the project’s costs, plans more wells to assess the find.
‘Quell Volatility’
“This BP oil, we are not going to see probably for another five or six years,” Schork said. “As long as the perception is that there’s oil in the pipeline, it will help quell volatility as we go forward."
Transocean:
BP has reopened the debate on when the "peak oil" supply will be reached by announcing a big new discovery in the Gulf of Mexico which some believe could be as large as the Forties, the biggest field ever found in the North Sea.
The strike comes days after Iran unveiled an even larger find of 8.8bn barrels of crude oil, and the moves have encouraged sceptics of theories which say that peak production has been reached, or soon will be, to hail a new golden age of exploration and supply.
BP, already the largest producer of hydrocarbons in the US, said its "giant" Tiber discovery in 4,100ft (1,250m) of water was particularly exciting because it promised to open up a whole new area.
Shares in BP were up 4% to 539p in afternoon trading, making it the biggest riser in the FTSE 100 despite the company saying much more drilling appraisal work was needed before Tiber’s commerciality could be guaranteed.
"Tiber represents BP’s second material discovery in the emerging lower tertiary play in the Gulf of Mexico, following our earlier Kaskida discovery," said Andy Inglis, chief executive of exploration and production. "These material discoveries, together with our industry-leading acreage position, support the continuing growth of our deepwater Gulf of Mexico business into the second half of the next decade."
Analysts agreed that the find appeared to be very significant. "Any time an oil major uses the word ‘giant’ you have to sit up and take note. Kaskida confirmed the western limits of the lower tertiary play and this extends the limits even further," said Matt Snyder, a Gulf of Mexico specialist at oil consultancy Wood Mackenzie.
Fadel Gheit, an equity analyst who follows the oil sector for the Oppenheimer brokerage in New York, said the discovery was a "big feather in BP’s cap and reaffirms their leading position in the deep water Gulf of Mexico".
BP said in a statement on Wednesday that it had made the "giant" find at its Tiber Prospect in the Keathley Canyon block 102, by drilling one of the deepest wells ever sunk by the industry.
Further appraisal will be required to ascertain the size of volumes of oil present, but a spokesman said the find should be bigger than its Kaskida discovery which has over 3 billion barrels of oil in place.
Estimates of recoverable reserves range from around 20 percent of oil in place.
"Assuming reserves in place of 4 billion barrels and a 35 percent recovery rate, BP’s proven reserves .. would rise by 868 million barrels — equivalent to 4.8 percent of the group’s 18.14billion barrels of proven reserves," Aymeric De-Villaret, oil analyst at Societe Generale said in a research note.
Nearly seven miles below the Gulf of Mexico, oil company BP has tapped into a vast pool of crude after digging the deepest oil well in the world.
The Tiber Prospect is expected to rank among the largest petroleum discoveries in the United States, potentially producing half as much crude in a day as Alaska’s famous North Slope oil field.
The company’s chief of exploration on Wednesday estimated that the Tiber deposit holds between 4 billion and 6 billion barrels of oil equivalent, which includes natural gas. That would be enough to satisfy U.S. demand for crude for nearly one year. But BP does not yet know how much it can extract.
"The Gulf of Mexico is proving to be a growing oil province, and a profitable one, if you can find the reserves," said Tyler Priest, professor and director of Global Studies at the Bauer College of Business at the University of Houston.
Finds like Thunder Horse, Tiber, and Kaskida fit BP’s high-risk, high-return strategy to a T. "We don’t do simple things," Inglis says. "We are prepared to work at the frontier and manage the risks." BP wants to do big projects of a billion barrels or more because that’s the only way to replace the huge volumes that it produces, and large scale translates into high returns. Unlike ExxonMobil and Royal Dutch Shell, which have substantial refining and marketing operations, BP is largely an exploration and production company. BP wants to be a first mover and get the choice deals ahead of everyone else. And BP stands out as a high roller among the majors. Witness TNK-BP, the company’s turbulent though lucrative joint venture with a group of Russian oligarchs who forced the ouster of the venture’s expatriate CEO last year. Then there’s BP’s lonely decision a few weeks ago to become the first big oil company to return to Iraq while ExxonMobil and Royal Dutch Shell balked at the Iraqis’ tough terms.
BP’s approach to finding new oil and gas involves big but calibrated gambles. Exploration wells in the deepwater Gulf of Mexico, for example, take months to drill and cost up to $200 million to bring onstream. With an overall exploration budget of $600 million to $1 billion per year, BP goes to great lengths to make sure it is taking the right risks.