New Discovery Boosts US Oil Reserves By 50%?

Promising New Oil Find in Gulf of Mexico
Tuesday September 5, 10:39 am ET
By Brad Foss, AP Business Writer
Oil Companies Say Promising Tests May Suggest Significant Gulf of
Mexico Discovery

California Poppy...

Sorry I didn't see your posts before I made mine. I think this oil
find is significant. How do they determine boundaries in the Gulf of
Mexico? How far out does Mexico claim?

Islander...

Those Mexicans would not dare claim that our oil is under their sea!

Earl...

Some background info.

This discovery is located about 175 miles east of Brownsville,
just about on the EEZ border with Mexico.

It is in 7000 ft of water which ups cost considerably.

It is beneath 20,000 feet of rock which makes it really
questionable.

Cost of production goes up with the square of depth.

Saudi produces at 2000 ft with a cost around $2 a barrel
We produce around 5000 ft which means a cost around $15 a barrel

This find at 20,000 ft (+7000) will be about 16 times as
expensive as land production at normal depths.

So it will be a great producer -- when oil is priced at $240 a
barrel.

Jerry Okamura...

Perhaps I do not understand the point you are trying to make, but "if" you
can only make money out of this new find, when oil is priced at $240 a
barrel, why even explore for the existence of oil at that depth? Why go
through the initial expense, which in an of itself has got to have cost a
bundle?

Remember that if the moon were covered with brilliant cut blue
white diamonds, it would still be cheaper to get your stones
from the Cartel and its diamond merchants.

Earl...

Territory boundary is 12 nautical miles

Pollution limits is 75 nautical miles

Exclusive Economic Zone boundary (ownership of fish and seabed
minerals) 200 nautical miles

If close to other countries the boundary is the mid point
between lands.

Mexico claims same distance -- this was established in UN Law of
the Sea (and increased our claims from 3 miles we wanted)

This is why it was funny seeing the jingoists wanting to stop
Cuba from drilling (and presumably worries about pollution) even
though the sites were in Cuba's EEZ.

William Boyd...

Does that mean we are going to make Mexico a state.

WASHINGTON (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 about 5.3 miles deep by U.S. oil company
Chevron Corp., with partners Statoil ASA of Norway and Devon Energy
Corp. of Oklahoma City. During the test, the Jack 2 well sustained a
flow rate of more than 6,000 barrels of oil per day, Statoil said.

"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.

The discovery has industrywide implications, analysts said.

"They may be the first ones to hit the jackpot, but if the current
thinking is correct, this is only a beginning. Other companies will
emerge as good, or better," said Oppenheimer & Co.'s Fadel Gheit.

The successful test wells do not mean a huge supply of oil will hit
the market anytime soon. Gheit estimated that the first production
might not come on line until after 2010, depending on how many more
test wells the companies drill.

The Wall Street Journal reported in Tuesday's editions 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 of oil and gas reserves, a total that would
boost the nation's current reserves by 50 percent.

"It is useless to attempt to reason a man out of what he was never reasoned into."
Jonathan Swift