BP weighs profits of deep sea oil

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Bill Radke: BP announced this morning it’s made a giant discovery deep in the Gulf of Mexico. Getting that oil out, though, will be another story. Marketplace’s Sam Eaton reports.

Sam Eaton: BP says the discovery could hold more than 3 billion barrels of oil. If that’s true it could be one of the largest finds in recent years.

Analyst Steven Leeb says that’s great news for BP:

Steven Leeb: But for the world as a whole, I think it’s just a proverbial drop in the bucket.

That’s because even if the well produces as much oil as BP expects, it still pales in comparison to the world’s daily consumption. And that’s if BP can actually recover the oil at a profit. The new discovery lies under more than a mile of water and another 35,000 feet of sea bed, which is more than the height of Mount Everest.

Leeb says in order to develop such a deep water find:

Leeb: It’s going to take oil prices significantly higher than they are today.

BP may not have much of a choice though. Oil rich countries like Saudi Arabia, and Venezuela are increasingly developing their own fields. That means the Gulf of Mexico as one of the few remaining places where Western oil companies can still expand their portfolios.

In Los Angeles, I’m Sam Eaton for Marketplace.