Summary
The 'Tiber' discovery by BP in the Gulf of Mexico will not have any impact on the global supply and demand for crude oil all by itself.
By the time it comes on-stream in the later part of the next decade numerous other oil fields would have been depleted and it will only help in keeping the decline rate from decreasing rapidly.
However, if we consider the numerous other discoveries and projects now in the planning stages, there could be less demand for imported crude oil in the US.
Analysis
BP reported a ‘Giant’ oil discovery named ‘Tiber’ in the Gulf of Mexico. The discovery is located in Keathley Canyon Block 102, and is estimated to hold recoverable reserves in the order of 1.0 billion barrels. Tiber was drilled to the total depth of 35,055 ft (10,685 m) in 4,132 ft (1,259 m) water depth, and encountered 800 ft (244 m) of net hydrocarbon pay.
Liquids production from the Federal Offshore Gulf of Mexico region has been declining rather rapidly. For example, In 2006 the liquids production rate was 589,000 b/d compared to 2002 when the production rate was 725,000 b/d, a 19% decrease.
Liquids production from less than 656 ft (200m) water depth has been declining rather rapidly. In 2006 the production rate was 292,000 b/d compared to 2002 when the production rate was 333,000 b/d, a 15% decrease.
Liquids production from greater than 656 ft (200m) water depth has been increasing dramatically. In 2002 the production rate was 197,000 b/d compared to 2006 when the production rate was 399,000 b/d, a 50% increase. Liquids production includes crude oil, condensate and natural gas liquids (NGL).
Therefore, the Tiber discovery alone will not be sufficient to impact on the global supply and demand for situation all by itself. However, taken together with all the other oil discoveries and oil fields now under development, the decline rate could be reverse, or at least keep the production decline in the Gulf of Mexico from declining further.
These discoveries are, namely, Atlantis, Tubular Bells, Kodiak, Freedom, Kaskida, Isabela, Santa Cruz, Mad Dog and Great White.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
