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June 9th, 2011
Exxon Predicts Big Yields From Discoveries in Gulf

Exxon Mobil has made two big new oil discoveries and a natural gas find in the deepwater Gulf of Mexico, news that underscores the importance of the basin to American crude output.

Oil and gas exploration in the gulf was halted by the United States government last year after the blowout at BP’s Macondo well, and activity in the gulf remains at levels far below those seen before the oil spill.

Exxon estimated the new wells could produce about 700 million barrels of oil equivalent.

“Seven hundred million barrels doesn’t happen very often,” said John White, an analyst at Triple Double Advisors in Houston. “That’s a lot of oil.”

This portion of the deepwater gulf is thought to hold as much as 15 billion barrels of oil. Recent large discoveries there include BP’s Kaskida field, estimated to hold three billion barrels of oil.

Exxon had reserves of 24.8 billion barrels of oil equivalent at the end of last year.

The discoveries are the company’s first in the gulf since the government moratorium was lifted.

The find “speaks to the fact there are resources in the gulf and if we have a tax and regulatory environment that will encourage us to find and produce our own domestic oil, the industry will respond,” said Mark Routt, an energy industry consultant with KBC Advanced Technologies.

Exxon has not finished its development plan yet, and more drilling will be needed to further appraise how much oil is in the reservoir. Production could be years away.

The wells are located in the Keathley Canyon at a water depth of about 7,000 feet, 250 miles southwest of New Orleans.

Exxon owns a 50 percent interest in the three new wells, which are part-owned by Eni Petroleum U.S., part of Eni of Italy, and Petrobras of Brazil.

Last month, Noble Energy said it made an oil discovery at its Santiago prospect in the deepwater gulf. Noble was the first company to receive a drilling permit from regulators after the drilling halt.




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