Chevron Strikes Oil
Tuesday, September 05, 2006SUSIE GHARIB: A possible gusher for the U.S. oil industry. Chevron and its partners announced today that they successfully found oil in a deep water section of the Gulf of Mexico. The find could boost the size of oil reserves by as much as 50 percent. Darren Gersh reports.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: What`s truly amazing about this picture is what you can`t see. Drop down from here through 7,000 feet of water and drill through another 21,000 feet of sand, salt and rock and you`ll hit what could be the most important U.S. oil discovery in a generation. The Jack 2 well is located off the coast of Louisiana, sitting along the edge of a 300-square-mile field along the Gulf of Mexico`s Walker Ridge. Remember that name. It could be as big as Alaska`s Prudhoe Bay.
BOB GRECO, DIR. EXPLORATION AND PRODUCTION, AMERICAN PETROLEUM INSTITUTE: It could be upwards of a million barrels a day of production if it`s another Prudhoe Bay. You`d be displacing the equivalent of a Saudi Arabia from the import standpoint.
GERSH: Could be. Experts say that oil won`t show up here for at least another four to five years. Chevron owns a 50 percent stake in the Jack 2 field. Devon Energy and Norway`s Statoil split the rest. Oil expert Euan Craik says more work needs to be done before the companies know whether Walker Ridge is a three billion barrel oil reservoir or a monster 15 billion barrel find.
EUAN CRAIK, EXECUTIVE EDITOR, PETROLEUM ARGUS: You`re not really going to know exactly the extent of the oil deposit that`s down there until another well has been drilled and you can say, "well, hey, you guys, we got oil over here. We`ve got it over there. Chances are there`s something in the middle, too.
GERSH: The new discovery shows how far oil drilling technology has come. These old wells reached a few thousand feet at most. Today, oil companies can drill for miles and use sophisticated computers to recover more oil from a field.
GRECO: As technology has advanced, we`ve been able to move farther and farther offshore over the past three or four decades. So we`re to the point where we`re now operating at 7,000, 8,000 feet of water. That would have been unthinkable 10 years ago.
GERSH: There are still many risks. The oil in the Walker Ridge could prove hard to extract or it could yield a lower grade of oil. But experts are taking today`s news as proof there`s still plenty of life left in the oil patch. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
