BP has trumpeted a ‘giant’ discovery in the Tiber Prospect, in the deepwater Gulf of Mexico. Giant is a fairly dramatic term.
The IEA’s last World Energy Outlook defines ‘giant’ fields as 500m to 5bn proven and probable barrels. The BP announcement, however, was short on numbers:
“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, chief executive, 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.”
So how big is it? This is what Goldman Sachs’ analysts wrote:
We don’t have a size yet for the discovery, but we can assume c1 bn bls of recoverable reserves. This discovery will be very challenging to develop due to its complex geology (Lower tertiary) and water depth (almost 11 km) and is unlikely to be producing before 2014. We value these reserves at c$3/bl. BP owns a 62% stake (Petrobras 20%, ConocoPhillips 18%) and therefore this discovery could be worth c$1.9 bn net to them (1.1% of market cap). Good news for BP, but it is hardly transformational and does not provide a solution to their thin pipeline of new projects in the 2010-13 period.
Any announcement of a discovery by a major means its important. Using the word ‘giant’ is almost unprecedented. From memory the last time something like this was announced it was Thunder Horse which is >1bn bbls. The previous discovery in the Lower Tertiary Kaskida was >3bn bbls in place and >300-500m bbls recoverable with significant upside. So this sounds like a 500m-1bn bbls discovery and with Kaskida the opening up of a whole new geological play. Company saying technologically ‘within the envelope’ and big advantages of critical mass. GoM oil discoveries are the highest value globally so this is a big positive – probably worth at least 3% even to a company the size of BP.
And if that sounds bullish, this story from BusinessWeek yesterday puts more stress on that allusion to the Kaskida fild:
BP’s chief of exploration, Michael Daly, terms the Tiber find “a very significant discovery” and says it is even “better” than the Kaskida field, another huge BP property in the Gulf of Mexico, with an estimated 4 billion to 6 billion barrels of oil in place.