Thats ashame we need to end up finding more there.
NEW YORK (Reuters) - Three oil companies, led by Chevron Corp. , have successfully drilled for oil in the Gulf of Mexico's deep waters, suggesting there may be more oil in the region that already provides a quarter of U.S. output, the companies said on Tuesday.
During the test, at record depths and pressure, the Jack No. 2 well flowed at a rate of more than 6,000 barrels of crude per day, Chevron said. That puts it on a par with discoveries in exploration hot spots such as the waters off Angola
With U.S. oil output in decline, big new fields are increasingly rare and oil companies are widening their search to more difficult places. Chevron, the No. 2 U.S. oil company, did not give an estimate of the field's reserves.
Chevron is the operator of the Jack prospect with a 50 percent working interest. Devon Energy and Norway's Statoil each own a 25 percent working interest.
"This is very important for Chevron, but it is more important for its other partners -- pound-for-pound, Devon gains a lot more than Chevron," said Oppenheimer & Co. analyst Fadel Gheit.
"Chevron has double the interest, but it is five times the size of Devon. So if I were betting, I'd put my money on Devon, not on Chevron."
Devon said its holdings in the lower-tertiary region of the Gulf of Mexico -- a bed of ancient rock deep under water -- could more than double its current reserve base of about two billion equivalent barrels in the coming years.
Chevron shares rose 2.7 percent and Devon shares rose 2.3 percent before the opening bell.
Chevron officials estimate the lower-tertiary region could hold 3 billion to 15 billion barrels of oil and gas reserves, according to The Wall Street Journal. The high end of that range would boost U.S. current reserves by 50 percent.
"This region is proving quite prospective. Certainly, the test well results are on the top end of most analysts' ranges," said Jason Kenney, an analyst at ING in London.
Mike Wittner of investment bank Calyon cautioned that until the size of the field is known, it will be difficult to draw conclusions.
He added, "It seems to be a significant find and there is still life left in the deepwater Gulf of Mexico, particularly as you move into ultra-deep water."
"The results of the Jack test allow Chevron and its co-owners to better understand the deliverability of the emerging lower-tertiary trend, a trend where Chevron is the largest leaseholder," said Gary Luquette, Chevron's president, North America Exploration and Production.
Chevron was not immediately available for further comment.
Chevron first announced the discovery of the Jack prospect in September 2004. It is 270 miles southwest of New Orleans and 175 miles offshore.
Chevron said the Jack well was completed and tested in 7,000 feet of water, and more than 20,000 feet under the sea floor, breaking Chevron's 2004 Tahiti well test record as the deepest successful well test in the Gulf of Mexico.
The Jack No. 2 well was drilled to a total depth of 28,175 feet.
More than half a dozen world records for test equipment pressure, depth, and duration in deepwater were set during the Jack well test, Chevron said.
Chevron and its co-owners plan to drill an additional appraisal well next year.
Chevron said it is the largest lease holder in the deepwater Gulf of Mexico and is currently developing the $3.5 billion Tahiti project, scheduled to commence production in 2008.
News 
Market Data 
Discover 
