New Oil Discovery in the Gulf: 2 Trillion Cubic Feet, 165 Million Barrels, and They're Not Done Yet
CHRON.COM (January 11) -- McMoRan Exploration Co. today announced what it said could be one of the largest oil and natural gas discoveries in the shallow waters of the Gulf of Mexico in decades. The discovery was made at the Davy Jones ultra-deep prospect located on South Marsh Island Block 230 in about 20 feet of water and 10 miles off the Louisiana coast, the New Orleans company and Energy XXI, one of its Houston partners in the project, said in statements this morning.
The well was drilled to 28,263 feet and found a 135-foot column of hydrocarbon-filled sands in the Wilcox section of the Eocene and Paleocene geologic trends. That puts the estimated the size of the discovery close to 2 trillion cubic feet of resources, rivaling some oil and gas discoveries in the deep water Gulf.
FORBES.COM -- Shares of oil companies McMoran Exploration, Energy XXI and Plains Exploration & Production are jumping this morning amid news that the trio has made a nice oil discovery at its Davy Jones prospect in the Gulf of Mexico. Drilling logs on the 28,000-foot-deep well (that's 5 miles down!) show a likely prize of as much as 165 million barrels of oil and natural gas. The partners aren't done drilling either: the plan is to keep drilling down to 29,000 feet.
HT: Bloggin' Brewskie
20 Comments:
Mark,
While I appreciate the recognition, someone else deserves the HT on this one.
Junkyard_Hawg: You're right, it should be Bloggin' Brewskie, and I have updated the post to correct it. Thanks for letting me know.
Mark
Bloggin Brewskie, is this costly oil to extract since it is so deep?
Regardless, this is great news. Drill Baby Driil.
That's some Peal Oil problem.
There is No oil there. It's too hot at that depth in that structure for oil.
There might be some nat gas liquids.
It's, basically, 2 Trillion cu ft of nat gas, which is just a touch more than we use in a month.
I find it interesting some people are in denial about peak oil when global oil production peaked at roughly 85 million barrels a day five years ago.
Canada’s top economist Jeff Rubin predicts $225 for a barrel of oil by 2012
25 June 2009
Jeff Rubin...frequently ranked as Canada's top economist...predicts that one barrel of oil will cost 225 dollars by 2012.
In 2000, Rubin correctly predicted that oil would top 50 dollars per barrel by 2005. And, in 2005 he got it right again, forecasting prices would top 100 dollars per barrel in 2007.
"It's not just about depletion [of OPEC oil fields], though depletion is playing a key role. It is also about the explosive growth of oil consumption in OPEC countries themselves. This is the reason why exports have not grown from OPEC in the last five years; they are in effect cannibalizing their own exports.
Every year we lose four million barrels a day [of production due to depletion]. Over the next five years, we are going to have to find 20 million barrels a day of new production, just so that we can [continue to] consume what we consume today.
We think that efficiency leads to conservation but history has shown that is not what happens.
The average engine today is 30 percent more efficient than the engines produced before the OPEC oil shocks [of the 1970s]. Yet, the average [North American] vehicle consumes just as much gasoline in the course of a year.
Back in the 1970s, we [North Americans] used to drive about 9,000 miles a year, now we drive 12,000. Back in the 1970s, we weren't living in the far-flung suburbs. All those gains in efficiency have led us to, ever more efficiently, consume more and more oil."
Peak oil will cause prices to rise or goods to shrink. We've seen oil prices rise. Now, we're about to see goods shrinking.
PeakTrader said...
I find it interesting some people are in denial about peak oil when global oil production peaked at roughly 85 million barrels a day five years ago.
Here's the fundamental problem I have with "Peak Oil". What exactly are we supposed to do about it?
Even if someone in the future sent me a message saying there was some new bacteria that was eating oil and it was literally gone in 30 years, there's a lot of time before I have to buy my solar assisted bicycle.
Remember all the money that went into alternative energy in the 70's that just went nowhere? The problem really was solved by more efficient use of oil, not alternative energy. My dad's car got 8 to 11 mpg in the early 70's. That got into the 25 to 30 mpg range by the end of the decade.
Price will continue to spur efficiency. And at some point alternatives will be competitive.
I really think OPEC got spooked by the 2008 price spike. Unlike the 70's, alternative technology is much closer to being competitive now. Hybrid cars can be converted
to plug in and charge the batteries. The Volt will be the first OEM example.
Until recently, there never really was a possibility of electricity competing with oil for transportation. A bit too expensive now, but at some point oil comes up and electric/hybrid cars get cheaper. Or natural gas vehicles. Or that tariff on Brazilian ethanol finally comes off.
Brazilian Ethanol was selling for, a couple of weeks ago, $3.26 gal, wholesale.
U.S. Corn Ethanol was selling, today, on the CBOT for $1.81/gal. That's without any subsidies.
I'm still amazed that anyone buys into the peak oil myths...
Eugene Island 330
OA, you stated: "Here's the fundamental problem I have with "Peak Oil". What exactly are we supposed to do about it?"
You'll find out, if you don't know. For example, government squandered a lot of money mostly spinning the economy's wheels in 2009 (peak deficit). So, it's reasonable to expect government will find ways to increase its revenues in 2010 (it has already begun). You can expect taxes and prices to rise (and many other consequences), because rich people aren't really going to pay that much.
Junkyard_hawg1985 and Mark,
Junkyard_hawg1985 can have the credit; I could care less.
Gettingrational,
Yes, a well this deep will be costly to develop.
Yeah PeakTrader, I agree with your predictions. But Peak Oil didn't create the massive increase in government spending. And it won't create the taxes.
Fairly high oil prices are just about given. Not only has demand stayed strong, but OPEC wants prices about where they are. And even the environmentalists want oil where it is. All those "green jobs" initiatives sound even more foolish if oil drops back down.
It's also a bit of a short dollar play.
But Peak Oil has never seemed to be about investment positioning. If it is, then I completely misunderstand what Peak Oil is about. It always seemed to be more about impending shortages.
Note to Peak Trader:
In addition, there are more people and more cars in the United States than we had in 1970.
165 million barrels?
That's about 2 days of world wide consumption. In order to get out of this energy fix, we need discoveries like this every other day. Not every week, or month. Or year, as is currently the case. That's about 180 times too little.
Here's the fundamental problem I have with "Peak Oil". What exactly are we supposed to do about it?
We are supposed to make it clear to our governments that we will not find interference with the energy markets acceptable. It is time that we stopped tolerating some idiot bureaucrat trying to pick winners by taxing the productive class to subsidize some rent seekers who made the appropriate donations to their favourite political party. It is time that we told the courts to dismiss frivolous lawsuits that are stopping the development of energy production assets. It is time that we told the extremists that their anti-human philosophy will not be supported by our contribution or taxpayer funds.
Just because we will not be able to produce more conventional oil than we did five years ago it does not mean that we will produce let energy. But to have that happen we need to have governments stop being the problem and let the market come up with solutions.
For the record, the ultra-deep fields will not be that solution because they are too costly to develop and too quick to deplete. While their contributions will be welcome they will not be able to offset the collapse of production from conventional geological formations.
VangeIV,
You know, we've had our tumbles but I thought I'd tell you anyway: what you just wrote is damn good. If you ever write your elected representatives, I hope you take same powerful rhetoric and apply it to your letter/email.
I think the reason this is 'big news' is that McMoRan drilled a structure similar (or same geological units) to the ones that are producing in deeper waters in the gulf. The idea is that there is much more nat gas/liquids to be found in surrounding blocks (and along the US coastline). The McMoRan block is only 20,000 acres.
Definitely costly, another article mentioned something like $165 million for 10 wells to confirm discovery.
I think the reason this is 'big news' is that McMoRan drilled a structure similar (or same geological units) to the ones that are producing in deeper waters in the gulf. The idea is that there is much more nat gas/liquids to be found in surrounding blocks (and along the US coastline). The McMoRan block is only 20,000 acres.
The 'big news' for me is the fact that there hasn't been enough testing to come up with any conclusion yet. These type of deep-water discovery announcements have been common in the past few years but they have yet to really produce any real natural gas or oil that would be sufficient to offset natural depletion rates.
Definitely costly, another article mentioned something like $165 million for 10 wells to confirm discovery.
Between the well costs and the infrastructure requirements it will be difficult to justify bringing the field to production unless prices are significantly higher. If the McKenzie Delta costs are too high I can't see that the ultra deep wells being economic at this time.
We also need to keep in mind previous announcements that never seemed to pan out. I recall PEMEX announcing a huge find in 2004 only to reduce the amount by 95% a year later. And in 2005 we had the 'massive' Jack 2 field found by Chevron, Statoil, and Devon. After the hype about the find not much was heard from the partners about development and Jack 2 is still a dream. And does anyone remember the Kashagan Field? I do because I had shares in a Kazakh company that went from $4 to $64 in a vary short period of time. That field was supposed to be up and producing by 2007. Now it is hoped that oil will be flowing by late 2012.
I suggest that we stop getting excited by the hype and starting to look at the hard facts. Sadly, they are not what we are told they are.
Whoopee.
Every discovery is welcome but this is really small potatoes and should not be a basis for a change in government policy.
Like the shale gas PR drive, this is overblown in importance.
Yes, please, more drilling. This one just wets the whistle.
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