New Gulf of Mexico oil find isn't much

Wednesday, September 06, 2006

Despite the the excitement of news headline writers, the reported discovery of a new Gulf of Mexico oil field will, at best, only slow the decline in annual U.S. production in coming years.

According to various news stories:

It could be the biggest domestic oil find in 38 years, but production is years away, and even then it won't reverse the nation's growing reliance on imports or have any meaningful effect at the gasoline pump.

A group led by Chevron has tapped a petroleum pool that lies 270 miles south of New Orleans in a region that could hold up to 15 billion barrels of oil — more than Alaska's Prudhoe Bay.

Experts predicted Chevron's successful test drill in its Walker Ridge area some 5.3 miles below the gulf waters may lead to 750,000 barrels of new daily U.S. crude-oil production within six years.

However, according to The Seattle Times version of the news:

Some analysts urged caution in inferring too much, too soon.

"One well doesn't tell you a lot of information," said Matthew Simmons, a Houston investment banker and author of "Twilight in the Desert: The Coming Saudi Oil Shock and the Global Economy."

The Associated Press story also dampened the significance of the find:

``It's a nice positive, but the US still has a big difference between its consumption and indigenous production," said Art Smith, chief executive of energy consultant John S. Herold. ``We'll still be importing more than 50 percent of our oil needs."