British energy major BP has made a "giant" oil discovery in the Gulf of Mexico after drilling one of the industry's deepest-ever wells.
"BP announced today a giant oil discovery at its Tiber Prospect in the deepwater Gulf of Mexico," the company said in a statement on Wednesday.
"The Tiber well was drilled to a total depth of approximately 35,055 feet (10,685 metres) making it one of the deepest wells ever drilled by the oil and gas industry," it added.
The announcement sent BP's share price rising 3.4 per cent to 537.15 pence on London's benchmark FTSE 100 index, which was down 0.6 per cent nearing the close.
Iain Armstrong, analyst at Brewin Dolphin, said the discovery may have implications for long-term oil prices.
"It will ease concerns about peak oil because it shows there is life left in these mature areas," he said, adding that it could be the second half of the next decade before the find is producing.
The discovery also bodes well for other exploration in that part of the Gulf of Mexico, including at Royal Dutch Shell's nearby Great White field, said Jason Kenny, oil analyst at ING in Edinburgh.
BP's discovery comes as the industry this week marks 150 years since crude was first recovered from a drilled well and days after Scottish group Cairn Energy began pumping oil in India as exploration in the North Sea dwindles.
The discovery is larger than BP's Kaskida find, which contains around three billion barrels, in the same geological area three years ago.
The industry definition of a "giant" oil find refers to a field from which more than 500 million barrels of oil or gas equivalent can be recovered. Much oil found is never extracted because bringing it to the surface is too expensive.
Peter Hutton, an analyst at NCB Oils, said Wednesday's announcement would be seen as "confirmation of BP's strong focus on Gulf of Mexico" exploration.
In the Gulf of Mexico, BP operates Tiber, in which it has a 62 per cent stake. Its co-owners are Brazilian oil giant Petrobras, with 20 per cent and US group ConocoPhillips with 18 per cent.
"Tiber represents BP's second material discovery in the emerging Lower Tertiary play in the Gulf of Mexico, following our earlier Kaskida discovery," said Andy Inglis, BP chief executive for Exploration and Production.
"These material discoveries together with our industry leading acreage position support the continuing growth of our deepwater Gulf of Mexico business into the second half of the next decade."
BP is the biggest producer of oil and gas in the Gulf of Mexico with current net production of more than 400,000 barrels of oil equivalent per day, the company said in its statement.
This could rise to 650,000 barrels daily within the next 15 years thanks to the Kaskida and Tiber wells.
The discovery also bodes well for other exploration in that part of the Gulf of Mexico, including at Royal Dutch Shell's nearby Great White field, said Jason Kenny, oil analyst at ING in Edinburgh.
The Gulf of Mexico has become increasingly important to Western oil majors as oil-rich countries such as Saudi Arabia, Venezuela and Russia reserve their richest fields to be developed by their state-owned oil companies.
Energy groups are increasingly drilling in the Gulf of Mexico and elsewhere as North Sea oil fields dry up.
Cairn Energy on Saturday began pumping from a vast oilfield in the Indian desert state of Rajasthan that is set to increase India's total output by 20 per cent.
Cairn's field, India's largest onshore and the biggest find in over 20 years, will increase India's oil output by a fifth once it hits its initial peak production target of 175,000 barrels a day in 2011.
This is in contrast to the North Sea, where expenditure on exploration was down 70 per cent at the start of 2009, according to industry body Oil & Gas UK.
AFP, Reuters