Chevron’s Gulf of Mexico Test Points To Significant Oil Reserves
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The most eagerly watched oil prospect in the deep-water American Gulf of Mexico, the Jack field, has passed a production test with flying colors, paving the way for development of an emerging geological play that could contain billions of barrels of hydrocarbon reserves.
Chevron Corp.(CVX) and its partners Statoil ASA (STO) and Devon Energy Corp. (DVN) Tuesday said the Jack No. 2 well flowed at more than 6,000 barrels a day, meeting expectations.The well is located in what operators of crude oil and natural gas projects call the “lower tertiary,” an ancient rock layer that extends for hundreds of miles deep beneath the Gulf of Mexico’s sea bottom.
The success of the Jack well test is the second recent development that raises the lower tertiary’s profile — as well as chances that it could augment American Gulf oil and gas production significantly. Domestic oil output has taken a hit from the partial shutdown of BP PLC-operated (BP) Prudhoe Bay in Alaska. Despite the region’s vulnerability to devastating hurricanes, the Gulf is becoming home to an increasing number of oil prospects as America is looking to wean itself off sources plagued by instability.
The flow test, the first in the lower tertiary, indicates that the region’s finds “will be most likely productive,” said David Heikkinen, an analyst with Houston-based energy research firm Pickering Energy Partners. “That bodes very well for the industry as a whole.”
Production from the area could add 300,000 to 500,000 barrels of oil a day to American output, Mr. Heikkinen said. The Gulf currently has a production capacity of about 1.5 million.
Tuesday’s announcement also bodes well for Chevron, Devon and Anadarko Petroleum Corp. (CVX), which are the largest holders of leases with lower tertiary discoveries, Mr. Heikkinen said. Last Thursday, Oklahoma City-based Devon and Anadarko, in partnership with BP PLC (BP), disclosed a discovery that Devon described as the “largest to date” in the lower tertiary.
Devon’s stake in 4 discoveries and 19 prospects in the lower tertiary could add between 2 billion and 5 billion barrels of oil equivalent to the company’s reserves, Stephen Hadden, Devon’s senior exploration and production vice president, said during a conference call with investors.
