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Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

In Gulf of Mexico, Industry Closes In On New Oil Source and BP Hires Former Judge To Be U.S. Ombudsman

  • Summary: Chevron, Devon Energy and Statoil are expected to announce a major breakthrough in accessing deep-water oil fields in the Gulf of Mexico -- the nation's biggest domestic source since Alaska's North Slope discovery. A production test has apparently been successful in the 'lower-tertiary' region, a 5-mile-deep, 300-mile-wide area that's 270 miles southwest of New Orleans. The companies estimate that up to 15 billion barrels of oil and gas reserves may be extracted from the find. It's a promising sign for other companies exploring the area as well: Anadarko, Royal Dutch Shell and BP. The Journal adds a cautious note that '(o)il companies still face technical challenges in tapping the lower tertiary, which requires them to penetrate unprecedented depths.' In a separate development aimed at stemming recent criticism over its operations, BP has hired former U.S. District Judge Stanley Sporkin to serve as company ombudsman. Following the recent pipe-corrosion affair at Prudhoe Bay, BP Alaska workers took complaints about company practice to an outside party. Sporkin has experience in Alaskan oil matters, having presided over a high-profile 1993 case brought by oil-tank broker Charles Hamel against the consortium that owns the Trans-Alaska Pipeline.
  • Comment on related stocks/ETFs: The announcement of potential new supply comes as oil prices fall another $1 on lower U.S. demand for gasoline and eased hurricane fears. Phil Davis is convinced crude oil prices still have a long way to fall, and may be subject to manipulation by the powers that be. Paul Kedrosky says 'peak oil' is inevitable, but demand will slack off under higher prices. Here are four independent deepwater oil riggers with fantastic fundamentals.
Source: Major New Oil Source Found in Gulf of Mexico