US oil giant Chevron, the lead partner in the $43 billion Gorgon gas project at Barrow Island, will spend $7.5 billion developing one of the world's deepest oil reservoirs off the Louisiana coast.
Chevron last night approved development of its big Jack and St Malo fields, 450km south of New Orleans, in waters more than 2.1 km deep.
Chevron set a world record in 2004 when it first drilled the Jack well to a depth of almost 7 km below the seafloor.
The fields have total resources of more than 500 million barrels of oil and are expected to produce over 170,000 barrels of oil and 42.5 million cubic feet of gas daily once operations begin in 2014.
The approval comes just six months after a massive fire and leak at BP's Macondo deepwater gulf development resulted in one of the world's worst ever oil spills, leaking more than 4 million barrels of oil into the ocean before it was contained last month.
The clean-up has already cost BP over $US8 billion and chopped over $30bn from its market capitalisation.
It also sparked international concern over the safety and manageability of oil development in such deep water, and led to the US government imposing a temporary moratorium on all deepwater drilling in the Gulf.
That moratorium was lifted two weeks ago.
Chevron North America president Gary Luquette said the Jack development would help meet future US energy demand "while delivering a safe and reliable deepwater operation".
Chevron is one of four major oil companies which in July announced they would spend $US1 billion to develop a rapid response and containment system to deal with any future spills in the Gulf.
The quartet includes fellow Gorgon partners Shell and ExxonMobil, as well as ConocoPhillips, which operates the Bayu-Undan LNG project in the Timor Sea.
Chevron's progress at Jack will be monitored closely by conservationists and regulators in Australia, given the challenges Chevron faces in developing Gorgon at such an extremely environmentally sensitive location as Barrow Island, an A Class nature reserve.
In July, state petroleum minister Norman Moore and his federal counterpart Martin Ferguson told WA Business News that state and federal governments were working closely with industry to implement "appropriate risk mitigation measures" in Australia.
