Finally some good news: Gulf oil discovery

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BP Makes 'Giant' Oil Discovery in Gulf of Mexico 

By Eduard Gismatullin

Sept. 2 (Bloomberg) -- BP Plc, Europe's second-largest oil company, reported a "giant" discovery at the Tiber Prospect in the U.S. Gulf of Mexico that may contain more than 3 billion barrels, after drilling the world's deepest exploration well.

The well is located about 250 miles (400 kilometers) southeast of Houston, the London-based company said today in a statement. It was drilled to approximately 35,055 feet (10,685 meters), greater than the height of Mount Everest.

The latest discovery will help BP, already the biggest producer in the Gulf of Mexico, boost output in the region by 50 percent to 600,000 barrels of oil equivalent a day after 2020. It's equal to about a year's output from Saudi Arabia, the biggest exporter in the Organization of Petroleum Exporting Countries, as well as coming close to matching the U.K.'s entire proven reserves.

"It will take a while to develop, the second half of next decade, but it's very important," Jonathan Rigby, an analyst at UBS AG in London, said in a telephone interview.

BP climbed 22.15 pence, or 4.3 percent, to 541.65 pence in London, the highest close since January. BP has gained 3 percent since the start of this year.

BP, led by Chief Executive Officer Tony Hayward, is developing nine projectsin the Gulf of Mexico and overtook Royal Dutch Shell Plc in terms of output in the region after ramping up the Thunder Horse platform to more than 300,000 barrels of oil equivalent a day.

Thunder Horse

Hayward, who took over as CEO from John Browne in May 2007, is boosting production growth after delays at projects including Thunder Horse led to an operational gap with rivals. BP has a history of pushing back the frontiers of exploration in North America, and pioneered enhanced oil recovery techniques in Alaska.

Oil companies have been increasingly turning to more technically challenging fields as oil-rich nations limit access. Tiber will help allay concerns over BP's growth prospects given its reluctance to invest heavily in unconventional projects, such as oil sands in Canada, to replenish reserves as maturing fields age.

"What today's announcement proves is that BP is a very, very successful explorer," Irene Himona, an oil and gas analyst at Exane BNP Paribas, said by telephone. "They've opened up the whole area for discoveries."

Other major finds by the oil industry in recent years include the Tupi field in Brazil's pre-salt region, the largest oil discovery in the Americas since Mexico's Cantarell in 1976. Tupi may hold as many as 8 billion barrels of oil.

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