Chevron Makes Big Oil Find Off Texas

Chevron (CVX Quote) has confirmed a potentially huge oil find at its ultra-deepwater Buckskin prospect in the Gulf of Mexico.

The oil-bearing structure is about 200 miles off the coast of South Texas. The discovery well had to navigate almost 7,000 feet of water to a total depth of 29,404 feet -- an astounding engineering achievement for Buckskin's owners.

The well taps into the Lower Tertiary Trend -- the same geological formation that Anadarko Petroleum(APC Quote) successfully proved up earlier this week in its Heidelberg deepwater prospect.

Chevron owns 55% of the Buckskin. It is joined by Repsol YPF SA (REP Quote) of Spain, Maersk Oil America and Samson Offshore.

Until recently, the Lower Tertiary Trend was largely considered a wildcatter's pipe dream -- potentially a billion barrels of oil at a depth that was impossible to reach.

This week's double-header from Chevron and Anadarko is now forcing all the naysayers in the debate surrounding the Gulf's Lower Tertiary to rethink those conventional views.

Chevron also confirmed on Thursday that it will defer a planned improvement to its refinery in Pascagoula, Miss. A spokesperson said that the delay will stretch until 2010 at the earliest.

The upgrade would have added a 3,500-barrel-per-day heavy-oil cracker to the refinery. Chevron was largely intending to use the new facility to test new refining technology for heavier crude classes.

The mix of crude oil types that feed the U.S. huge energy appetite has swung wildly in favor of heavy crude in recent years. The adjustment sends a clear and alarming signal that domestic supplies of light sweet crude oil are dwindling fast, to be replaced by thicker, dirtier crude oil from major foreign suppliers like Venezuela and Nigeria.