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Daily Telegraph: Chevron strikes oil in ‘biggest US find’

EXTRACT: The news should boost the hopes of Shell and BP, which both own drilling leases in adjacent areas. Shares in Chevron, which owns 50pc of the well, and Statoil, which owns 25pc, rose around 3pc, while Devon, which owns the remainder, soared 12pc to an all-time high.

THE ARTICLE

By David Litterick in New York

(Filed: 06/09/2006)

Chevron said it had successfully tapped what could prove the largest deposit of crude oil ever discovered in the US.

The oil major broke half a dozen records during construction of the test well, which sits about 175 miles off the coast of Louisiana in the deep-water regions of the Gulf of Mexico.

Experts believe the ancient rocks that lie more than five miles below the sea bed could hold up to 15bn barrels of crude oil, an amount that would boost the known oil reserves in the US by about 50pc.

If the amount is confirmed, it would make it the most important new find of oil reserves since the discovery of Alaska’s North Slope more than a generation ago.

Even at the lower end of the estimates, 3bn barrels of oil could provide about 400,000 barrels a day, the same as the current full production of BP’s Prudhoe Bay field.

Chevron said the test well at the Jack oilfield was the deepest ever sunk and is reckoned to have cost around $100m (£53m). Full development of the field, which could commence next year after further tests, may cost several billion dollars.

Chevron, along with its partners Devon Oil and Statoil, discovered the site in 2004.

“The well test is an important milestone” in unlocking the new region’s commercial potential, said Paul Siegele, who heads Chevron’s deep-water Gulf exploration unit. “Based on the oil in place and the amount of structures yet to be drilled, this is exciting.”

This spring, the companies parked the Cajun Express, a 350ft floating rig, above the region. Chevron says that over the course of a month, it successfully produced 6,000 barrels of oil a day – oil that is both light and sweet, the kind that commands the best prices and is in the most demand. The test results came in above most industry predictions.

As the deposits discovered in the shallower areas of the Gulf slowly dry up, oil companies have been searching further afield. Technological gains have made the new wells possible.

The successful drilling operation is unlikely to usher in a new era of low oil prices as it is still small compared with the reserves in the Middle East.

However, it comes at a time when US politicians are increasingly worried about the country’s dependence on foreign sources of energy.

The news should boost the hopes of Shell and BP, which both own drilling leases in adjacent areas. Shares in Chevron, which owns 50pc of the well, and Statoil, which owns 25pc, rose around 3pc, while Devon, which owns the remainder, soared 12pc to an all-time high.
 

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