Bridging the Gulf

News reports are indicating that Chevron has discovered a huge oil deposit deep in the Gulf of Mexico that could more than double US reserves of oil. The find is estimated at 15 billion barrels of oil.

That's the good news. Indeed, that could be excellent news, though it will take several years before the field could come on line and production is ramped up.

Here's the bad news. We've got to figure out how to get at it. We know that the region is susceptible to major hurricanes, which can seriously disrupt oil production throughout the Gulf of Mexico. That means constructing equipment and rigs that that survive these storms.

Experts predict the San Ramon company's successful test drill of its Walker Ridge Block about 5.3 miles below the deep Gulf waters may lead to 750,000 barrels of new daily U.S. crude-oil production within six years. That's equal to about 15 percent of last week's U.S. oil production of 5.03 million barrels a day -- welcome news amid today's high oil prices caused by a world growing thirstier for oil.

``This play has been unfolding in the ultra-deep waters of the Gulf of Mexico for five years, and this is the breakthrough announcement,'' said Daniel Yergin, author of ``The Prize,'' a history of oil production. ``This discovery is at the frontier for world oil. You won't see the impact of this at the gas pump tomorrow, but you could in five or six years.''

Despite today's tight oil markets and high prices, Yergin, who heads oil consultancy Cambridge Energy Research Associates, maintains that oil should again be plentiful somewhere between 2010 and 2015, thanks in large measure to new technology that permits recovery from previously inaccessible reserves.

For now, however, the vast oil deposit won't significantly reduce the country's dependence on foreign oil and won't help lower prices at the pump in the near future.

``It's a nice positive, but the U.S. still has a big difference between its consumption and indigenous production,'' said Art Smith, chief executive of energy consultant John S. Herold. ``We'll still be importing more than 50 percent of our oil needs.''

Successful deep water oil finds in the Gulf of Mexico are sure to boost similar efforts off the shores of Africa and Brazil, challenging the popular view that the world may be running out of oil.

It will be at least several years before this find can be exploited and oil brought to the market. However, this find will mean that US reserves of petroleum will be significantly enhanced.