Big oil might be reeling from plunging crude oil prices, but that's not stopping these companies from drilling for oil offshore. This week, the industry hit the jackpot, announcing several major oil and gas discoveries around the world. Let's take a quick trip around the world to see where big oil made the discoveries that will fuel the world in the years ahead.
Introducing Guadalupe in the Gulf of Mexico
Chevron Corporation (NYSE:CVX), along with co-owners BP Plc (NYSE:BP) and Venari Resources LLC, announced the discovery of the Guadalupe oil prospect in the Lower Tertiary Wilcox Sand in the deepwater Gulf of Mexico. The well was drilled in 3,992 feet of water and to a total depth of 30,173 feet, or nearly six miles, where it encountered significant oil pay, which is the thickness of rock that can yield economical hydrocarbons. Chevron drilled the well using Transocean LTD's (NYSE:RIG) Discoverer India deepwater drillship.
While Chevron and its partners need to run more tests and drill additional appraisal wells to determine the full extent of the resources discovered, it would appear Chevron has found another large oil discovery in the Gulf of Mexico as it continues to unlock oil in the Gulf. As the following slide notes, the company has plenty of potential for additional discoveries in the area.
The North Sea isn't dry just yet
Next, we'll head out to the North Sea, where the industry announced two discoveries in the past week. The first discovery was made by Statoil ASA (NYSE:EQNR), ExxonMobil Corporation (NYSE:XOM), and a state-owned energy company. The find was located near the Grane field in the North Sea and was actually initially discovered in 1992 but abandoned because it was thought to be too small. A reassessment of the field found that it contains up to 80 million barrels of recoverable oil, according to Statoil, or more than 10 times the initial discovery, as new technologies have uncovered more oil. Even better, because of its close proximity to the Grane field, the two fields can share resources, making the discovery even more economical to develop.
The other find was made by BP and French energy company GDF Suez. The new oil field is locked in the North Sea's ancient sandstone in a formation that crossed into blocks that the two companies had operated separately. An exploration well drilled by Transocean flowed 5,350 barrels of oil equivalent per day at an initial test. It's an important find for the industry, as this section of the North Sea needs new oil discoveries in order to open up the development of several stranded discoveries that aren't yet economical to develop.
Big natural gas find offshore Africa
Finally, Royal Dutch Shell (NYSE:RDS.A)(NYSE:RDS.B) announced that it found a gas field under a layer of salt offshore Gabon in Africa. The discovery, which was made with a Chinese partner, encountered 650 feet of net gas pay in this pre-salt reservoir. This discovery would seem to confirm that offshore drilling in west Africa may find a comparable amount of energy resources as those found in the pre-salt fields discovered offshore from Brazil. Shell plans to run some additional tests to determine how much natural gas is in the field, but the latest discovery is very promising for the future of energy exploration offshore Africa.
Exploration is the lifeblood of the energy industry, and offshore drilling represents the industry's best long-term option for growth. The major discoveries announced last week suggest that the industry will be able to keep the world's economy well-oiled since we'll have the resources to meet future needs. Meanwhile, as long as these discoveries can be economically developed, investors will reap strong returns as these discoveries are transitioned into production and profits in the years ahead.