Exxonâs CEO Rex Tillerson announced back in March plans to spend $100 million a day for the next five years to expand the search for oil and natural gas previously thought to be impenetrable and inaccessible.Â The geologic formations of the firmâs exploration prospects extend from Greenland in the far north to Madagascar off Africa to Vietnam in Southeast Asia.
Wednesday June 8 2011 saw Exxon announce it found the equivalent of 700 million barrels of oil beneath the Gulf of Mexico, the biggest discovery in the region in 12 years.
Exxon Hadrian Field Discovery Map
The reservoir is in a field called the Hadrian about 250 miles (400 kilometers) southwest of New Orleans in 7,000 feet of water.Â The new find follows after British Petroleumâs (with partner Exxon) 1 billion-barrel Thunder Horse find in 1999.
Exxon company spokesman Patrick McGinn told reporters Exxon engineers now are drilling deeper on the third Hadrian well, which currently extends 23,000 feet beneath the sea surface, because they believe there is more oil to be found.
Keep in mind that Exxon is a publicly traded U.S. company, off times the largest in the world. These numbers are likely very conservative and the company is very confident of the numbers and the significance.
While the press and media play up the profits, sometimes over $10 billion, the news of such a find with expenditures of a billion dollars every ten days goes overlooked.Â For consumers this is very good news.
Gulf of Mexico Oil and Gas Activity
Oil production from the U.S. Gulf of Mexico accounted for 29% of U.S. crude production in 2009, according to the Energy Information Administration. Wells in water 1,000 feet or deeper accounted for 81 percent of the Gulfâs oil output last year, a 10-fold increase from 1991, according to the Bureau of Ocean Energy.Â With the onshore Bakken production growing fast, opportunities to use lots of oil from the Canadian oil sands, the U.S. economy looks to have supply available for quite some time.
The entire U.S. oil industry, with more than 9 million jobs on the line and governments relying on tens of billions of dollars in taxes from income to sales on to fuel taxes, the likelihood of gas lines is diminishing for U.S. consumers.Â This news is a bit of âgetting America back to workâ.
Representative Darrell Issa, a California Republican who leads the House Oversight and Government Reform Committee pointed out Exxon could have made the discovery sooner if the administration of President Obama hadnât been delaying the issuing of drilling permits after the moratorium was lifted in October.Â Issa is gentile enough not to point out the damage done by the moratorium in the first place.
Exxon understands the results of three exploratory wells to show the Hadrian field is about 85 percent oil of the full equivalent spectrum of the petroleum products now flowing.Â That makes the oil share of the public documents disclosing the petroleum equivalents to be nearly 600 million barrels.Â One thing history has shown are these estimates tending to grow over time.
Rigzone, a research and tracking firm on drilling activity reports Exxon is leasing A.P. Moeller-Maersk A/Sâs Maersk Developer rig to drill into Hadrian. The 2-year-old vessel is equipped to drill as deep as 40,000 feet beneath the sea surface.
Maersk Developer in Transit
The U.S. economy is going through 17 to 18 million barrels of oil each day.Â 600 million barrels works out to barely a monthâs worth of supply.Â The U.S. can hardly be waiting around for bureaucrats for months on end without serious consequences building up.Â Add to that the devastation for the people in the Gulf Coast area who need the employment opportunities.Â Things need to be picking up in the region and quickly.Â The oil spilled from the BP disaster will be consumed and cleaned long before most of the people get back to work â a situation that begs some serious moral and ethical questions about the governmental oversight.
The realization that Exxon alone is committed to spending $100 million every day for the next half decade puts the scale involved into a realistâs perspective.Â Alternatives, renewables, synthetics and other ideas are nowhere remotely close to the levels of investment petroleum uses. But only petroleum can deliver the fuels today with the energy the economy needs.
Another perspective is the cash flow from petroleum is still self-sustaining and provides some funding for the alternatives. While people might groan about the cost of gasoline, the price includes, so far at least, that the next fill up will be there when needed.
By. Brian Westenhaus