Energy Efficiency

A giant deepwater oil discovery in the Tiber field (Gulf of Mexico) is likely to increase BP’s oil footprint in the region; about 8% of the oil and gas BP produces comes from the U.S. Gulf. BP is the biggest producer in the Gulf, to the tune of 400,000 barrels of crude oil and natural gas a day.

The company runs the second-largest field there, in the U.S. called Thunder Horse and operates the largest U.S. oilfield, Alaska’s Prudhoe Bay.

The Tiber discovery, which could hold more than 3 billion barrels of oil equivalent, follows another massive nearby find in the Kaskida field in 2006 and if both are developed, they could boost BP’s output in the Gulf to around 650,000 barrels of oil equivalent day during the next 15 years.

Globally, BP produced about 4.1 million barrels a day in the second quarter (2009).

In 2010, about 14% of crude oil production in the lower 48 American states will come from four deepwater Gulf of Mexico oil fields, two of which (Atlantis and Thunder Horse,) are operated by BP, says the U.S. EIA (Energy Information Administration). These discoveries will boost the relative importance of BP’s North American portfolio, which already represents about 40% of BP’s global business, which co-incidentally is also what the USA uses of the total world oil production.

BP has had a chequered past in the USA not always so triumphant in these waters. The company has taken a few hits, with the Thunder Horse field delayed by three years before starting in 2008 and Atlantis was also postponed.

A 2005 explosion at BP’s Texas City refinery killed 15 workers and the company agreed to plead guilty to criminal environmental charges related to the blast.

Then in 2006 the U.S. regulators sued BP for manipulating the propane market and later that year, BP was forced to shut down a bulk of the oil output at Prudhoe Bay following the discovery of corrosion in some pipelines.

BP’s latest discovery is one of the deepest oil fields ever drilled. The Gulf of Mexico holds its own as considering the first well out of sight of land was drilled in 1947. Bob Fryklund (a consultant with HIS), claims the Gulf – thanks to deeper areas made exploitable by new technology – is part of the offshore “Golden Triangle,” that also comprises West Africa and Brazil.

Brazilian offshore finds are the largest – Petroleo Brasileiro’s Tupi field is estimated to contain some 8 billion barrels of oil equivalent or 93 days (based on the worlds consumption of 85.7 million barrels a day) and while the Brazil government is quite stable, the continuity is not as assured as the Gulf of Mexico as they look to follow the lead of other resource-rich countries such as Russia and Venezuela by proposing new laws that put the state-owned oil company in the driver’s seat of development of newly discovered reserves.

Given the financial quagmire of the USA and the highly questionable value of the US$, it is a question of how the Americans can actually pay for their addiction on energy; with less than 5% of the worlds population but using almost 40% of the worlds oil and no real industry or agricultural exports to pay for it, sooner or later someone will turn the tap off.