Royal Dutch Shell PLC announced Friday that they had made a significant oil discovery of approximately 100 million barrels, 25,000 feet below the sea bed, in 7,217 feet of water, on the eastern Gulf of Mexico. Six months ago BP PLC announced a "giant" discovery in the Gulf south of Louisiana containing approximately three billion barrels of oil. These discoveries are quite a turn around from years of exploration going back to the nineties of drillers coming up empty in this region and bode well for the success of future production in the Gulf of Mexico.
Until these recent finds, explorers were abandoning the Gulf of Mexico due to strings of unsuccessful drilling projects. Efforts were being focused in foreign waters with much higher operative expenses and much greater geopolitical risks. Oil exploration and production companies will now begin focusing again on the Gulf with a special emphasis on the largely unexplored eastern Gulf.
The recent successes are attributable to new deep sea drilling technologies that have given access to previously unpenetratable depths. Armed with these new techniques a record high 77 companies paid $949 million to the US Minerals Management Service last week for offshore leases.
Although several years will be needed to bring the new production to market, the exploration activity in the Gulf of Mexico is very good news for future US oil supplies.
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