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Chevron Corp., Devon Energy Corp. and Statoil ASA have discovered a well of crude sweet oil in the Gulf of Mexico that would be the largest find since the discovery of Alaska's North Slope more than a decade ago, the Wall Street Journal reported.
The three companies have produced the first successful oil from the 300-mile area that lies below the Gulf of Mexico, in a bed of rock called the "lower tertiary." The well sustained a flow rate of more than 6,000 barrels a day during the production test, according to the companies.
This test will lead development of the Jack field, located 270 miles southwest of New Orleans, and will allow, under federal lease, other companies to development including Anadarko Petroleum Corp., Petroleo Brasileiro, ExxonMobil Corp., BP Plc and Royal Dutch Shell.
Estimates from the three companies conclude that the well holds more than three billion and as much as 15 billion barrels of oil and gas reserves. If the well does hold 15 billion barrels, it would boost the nation's current reserve of 29.3 billion by 50 percent, according to the Wall Street Journal report.
The Jack well is five miles deep, one of the world's deepest, and is estimated to cost more than $100 million, the Journal reported. Developing the field to tap the newly-found resources could cost several billion dollars for drilling, building platforms and laying pipelines, according to industry officials. Chevron and its partners are currently debating whether to drill another appraisal well or move into the development of the Jack field, which will take three to four years before being able to produce oil.
This discovery in the Gulf is one of many still unexplored regions. Four other oil discoveries are located near Jack and 200 miles west, five discoveries are grouped together, including Shell's Great White field, which is estimated to hold 500 million barrels of oil and natural gas reserves, the Journal said.
In addition, BP announced that its Kaskida exploratory well had gone through 800 feet of oil-bearing rock, the second thickest oil zone found in the Gulf of Mexico.
With the recent discoveries, oil companies are expecting that the three billion barrel estimate made last year "is on the low side," Larry Nichols, Devon's chairman and CEO told the Journal.
The newspaper stated that while the discovery is sizeable, it does not compare to the Middle East oil fields and those in Mexico. The new discovery could cause a dip in crude oil prices, but not cause a long period of low-priced oil.