BP talks up 'giant' Gulf of Mexico oil find

The company said much more drilling appraisal work was needed before the field's commerciality could be guaranteed
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Terry Macalister, industrial correspondent guardian.co.uk, Wednesday 2 September 2009 14.14 BST Article history
BP has made a 'giant' oil find in the Gulf of Meixco. Photograph: Newscast

BP is threatening to confound pessimists worried about dwindling new oil supplies by announcing a "giant" 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 oil group, already the largest producer of hydrocarbons in the US, said its Tiber Prospect in 4,100 feet of water was particularly exciting because it promised to open up a whole new deepwater province in the Gulf.

Shares in BP raced ahead 4% to 539p making it the biggest riser in the FTSE 100 despite the company saying much more drilling appraisal work was needed before its commerciality could be guaranteed.

But the company also admitted that Tiber was bigger than the prospect on the nearby Kaskida field found in 2006 which has around 3bn barrels of oil reserves in place. Industry experts said Tiber might be as large as Forties which has 4bn barrels in place.

BP confirmed that the oil at Tiber was of a lighter nature - and therefore higher quality - than Kaskida making it more attractive for development which could cost billions of pounds.

Two discoveries around 40 miles apart make it much easier for BP, which owns 62% of the discovery alongside Petrobras of Brazil and ConocoPhillips of America, to justify building a platform and pipeline to shore. The companies will need to tackle very deep water - the well is one of the deepest ever drilled.

The oil has been found in the Lower Tertiary soils which were created over 30m years ago. The commerciality will depend on how much of the over 3bn reserves at Tiber can be recovered: in the case of Forties it has risen to well over 70% but can be as low as 30% in some cases.

Despite the uncertainty BP was doing nothing to play down the potential of a discovery which could, experts argue, increase the company's total US output from 910,000 barrels a day now by a further 200,000 barrels by 2020.

"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."