With Chevron tapping a petroleum pool that could hold as much as 15 billion barrels of oil, prospects for companies far beneath the deep waters of the Gulf of Mexico are looking up.
It could be the biggest domestic oil find in over three dacades with prospects of more oil than Prudhoe Bay field, but production is years away and won't be able to reverse the nation's growing reliance on imports or have an effect on the gas prices.
The successful test drill by a group led by Chevron could lead to as much as 750,000 barrels of new daily US crude oil production within 6 years.
Though it's equal to only about 15 percent of what the US has been producing per day, it confirms a new frontier in the untradeep water. The announcement of a test well with a sustained flow of more than 6,000 barrels a day is a good news to western companies at a time when its is harder and more expensive to gain access to countries like Venezuela and Russia and with supplies at risk in the Middle East and Africa due to political unrest.
The first drop of oil from the field is not expected to hit the market till 2012.
The proximity of the Gulf of Mexico to the US makes the new discovery more attractive to the industry and it could have a reaction on other states to relax the limits they have set on drillling for environmental or tourism reasons.
US reserves are far less when compared to Saudi Arabia's - 29 billion barrels to Saudi's 250 billion.
While some observers are cautioning over inferring too much too soon, others feel that this discovery is a portent of the possibilities off Africa and Brazil.
The dearth of rigs capable of deep sea drilling and the long lead times required to drill and complete deepwater wells are some of the limitations forseen about developing the potential of the new discovery.
Analysts say that if oil prices remain high, costly deepwater exploration which is economically recoverable with oil prices as low as $40 a barrel will expand. The present prices of near $70 a barrel make exploration viable.
As oil consultant Peter Beutel put it, "You can drill a lot of dry holes and get one to pay."
It's important to find bigger fields since the cost of looking for oil in deep water far from shore run high. It's unclear whether Chevron and its partners will build a floating platform and put oil directly into tankers or use it to connect pipelines running to the shore.
It's an expensive undertaking but a significant move in the opening up of a whole new exploration horizon.
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