Nick Snow
Washington Correspondent
WASHINGTON, DC, Sept. 6 -- Congressional energy leaders said that the massive oil discovery reported in the deepwater Gulf of Mexico on Sept. 5 demonstrates the need to open more of the region to oil and gas leasing and development (OGJ Online, Sept. 5, 2006).
"America needs America's oil, and suddenly we've found a lot more of it," House Energy and Commerce Committee Chairman Joe Barton (R-Tex.) said. "The discovery of oil that isn't half a world away and that might increase our country's petroleum reserves by billions of barrels in one swoop will do wonders for assuring that American drivers can get gasoline at a price they can afford to pay."
Chevron Corp. reported that more than 6,000 b/d of crude flowed from the Lower Tertiary formation during a production test in the second quarter of its Jack No. 2 well on Walker Ridge Block 758. Chevron operates and holds 50% interest in the lease. Devon Energy Corp. and Statoil ASA each hold 25% interest. The companies plan to drill a second appraisal well in 2007.
While the more than 10 million-acre play is still in its infancy, early estimates suggested that it might contain 9-15 billion bbl of recoverable oil equivalent, making it the biggest domestic discovery since Prudhoe Bay on Alaska's North Slope. US proved crude reserves currently total 21.4 billion bbl.
"The discovery of new oil reserves in the Gulf of Mexico underscores the need to develop Lease Sale 181 and regions south of there," Senate Energy and Natural Resources Committee Chairman Pete V. Domenici (R-NM) said. "Chevron estimates that recent discoveries in the gulf, including the one announced [Sept. 5], could boost US supplies by 50%. Imagine what that could do for pump prices in the future. Imagine what other resources we have in this region."
'Great news'
Sen. Mary L. Landrieu (D-La.) called the discovery "great news for achieving American energy independence [and] especially great news for Louisiana's offshore energy industry and the future of deepwater production." Much of the deepwater exploration and production activity will be operated from Port Fourchon, Venice, Morgan City, and other ports and land bases in the state, she noted.
The two senators said that the discovery strengthens the case for enacting its version of US Outer Continental Shelf leasing reforms, S. 3711, which passed the full Senate by a 71-25 vote on Aug. 1. It is headed to conference later this month with HR 4761, which the House approved by a 232-187 vote on June 29.
Domenici said that it would not be sufficient to leave opening acreage in the so-called Sale 181 area of the central and eastern gulf to the US Minerals Management Service, which included the region in its proposed 5-year OCS leasing plan for 2007-12. "MMS first proposed opening Lease Sale 181 in 1997 and the country is still waiting," he said.
"With oil prices hovering near $70/bbl and gasoline prices at $3/gal, it is past time to expand our exploration of this region. I urge the House to join us in opening Lease Sale 181 and Lease Sale 181 South for environmentally responsible oil and gas development," Domenici said.
Members of the House Resources Committee, which developed and sent HR 4761 to the floor, have said that they will press for their bill's more comprehensive approach, which includes Alaska and the East and West coasts. Senate energy leaders consider S. 3711, with an approach limited to the Gulf of Mexico, more politically acceptable.
Contact Nick Snow at [email protected].
