The find may amount to half of all the known U.S. reserves, the financial industry press is saying.
Chevron and Devon officials estimate that the recent discoveries in the Gulf of Mexico's lower-tertiary formations hold more than three billion barrels' and perhaps as much as 15 billion barrels' worth of oil and gas reserves. If the industry succeeds in finding 15 billion barrels of oil, it would boost the nation's current reserves of 29.3 billion barrels by 50%.
With our significant holdings in Chevron, it was good news for our family. My father had the wisdom to see Chevron's potential a number of years ago and has reaped benefits ever since. Regrettably, he passed away this morning, at the age of 95, at 6:10 a.m. before we learned of the latest news. I will probably not be posting much this week as a result.
Chevron (CVX) is up $1.63 to $66.47 at 3:36 p.m. EST, and Devon (DVN) is up $7.93 to 72.09, a 12.41 percent gain.
Here is the New York Times' version:
Promising New Oil Find in Gulf of Mexico
By THE ASSOCIATED PRESS
Published: September 5, 2006
Filed at 9:24 a.m. ET
OSLO, Norway (AP) -- Tests of a deep-water well in the Gulf of Mexico could indicate a significant oil discovery, three companies announced Tuesday, in the first project to tap into a region that reportedly could boost U.S. oil and gas reserves by as much as 50 percent.
The Jack 2 well was drilled by U.S. oil company Chevron Corp., with partners Statoil ASA of Norway and Devon Energy Corp. of Oklahoma City.
''Test results are very encouraging and may indicate a significant discovery. The full magnitude of the field's potential is still being defined,'' Statoil said in a statement.
During the test, the Jack 2 well sustained a flow rate of more than 6,000 barrels of oil per day, Statoil said.
The Wall Street Journal reported Monday that the region where the well is located could become the nation's biggest new domestic source of oil since the discovery of Alaska's North Slope more than a generation ago.
The Journal said Chevron and Devon officials estimate that recent discoveries in the Gulf of Mexico's lower-tertiary formations hold up to 15 billion barrels' worth of oil and gas reserves, a total that would boost the nation's current reserves by 50 percent.
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.
''This area is one of the new and promising deep-water areas in the Gulf of Mexico,'' said Oivind Reinertsen, senior vice president of Statoil's Gulf of Mexico assets in Houston.
''The Jack 2 well test data are encouraging and may form the basis of future development projects in Walker Ridge,'' he said.
In a separate statement, 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 it was drilled to a total depth of 28,175 feet in waters that are 7,000 feet deep.
Chevron has a 50 percent stake in the field, while Statoil and Devon own 25 percent each.
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