Anadarko Petroleum Corp., the U.S. independent oil company, has discovered a "potentially giant" field in the deep water of the Gulf of Mexico, one of the largest ever discovered in the region.
The Shenandoah 2 appraisal well, begun in September last year, has yielded a field that could hold 500 million or more barrels of oil, and may open up a new area of the Gulf for oil production.
The well goes eight kilometres (26,500 feet) below the seabed in 1,8 kilometres (5,800 feet) of water, and the field will require a multibillion-dollar investment in production facilities. The first oil is unlikely to flow from it until late in the decade at the earliest.
However, the success of Shenandoah is another sign of the resource potential of the Lower Tertiary level of rocks deep below the seabed of the Gulf of Mexico, raising hopes that it will remain an important oil-producing region for many years to come.
Anadarko owns 30 per cent of the well, and is the operator. ConocoPhillips also has 30 per cent and Cobalt International Energy has 20 per cent, while Marathon Oil and Venari Resources, a recent exploration start-up backed by Warburg Pincus, each have 10 per cent.
Bob Daniels, Anadarko's senior vice-president for deepwater and international exploration, highlighted evidence that the Shenandoah field had "reservoir rock and fluid properties of much higher quality than previously encountered by industry in Lower Tertiary discoveries," meaning that the oil would be easier to extract.
Brian Reinsborough, Venari's chief executive officer and president, told the Financial Times that he expected Shenandoah to be "very prolific," and "entirely different" from other deep Lower Tertiary discoveries.
He added that, even after the cost of putting new production facilities in place, "we believe the finding and development costs will be very attractive, because of the volumes we have found."
Participating in a discovery of this size is a coup for Venari, which was founded less than a year ago with $1.125-billion (U.S.) in capital, and was one of the first new entrants to the Gulf after the government's drilling moratorium following the 2010 Deepwater Horizon disaster.
The Coronado well a few miles away from Shenandoah, drilled by Chevron with Conoco, Anadarko and Venari as junior partners, has also shown "very positive indications," according to Conoco. Chevron has not yet made any formal statement on it, saying only that it expected to report results by August, but it seems likely to bring that forward.
Mr. Daniels said the Shenandoah Basin, where the wells have been drilled, "has the potential to become one of the most prolific new areas in the deepwater Gulf of Mexico."
The success at Shenandoah is more good news for Anadarko, which has scored high-profile successes recently with large gas discoveries off the coast of Mozambique.
Anadarko was a junior partner in BP's disaster-hit Macondo well in the Gulf of Mexico, but continued to explore actively in the region after the moratorium was lifted in 2010. It expects to drill six to eight wells there this year.
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