BP discovers 'giant' oil field deep beneath waters of the Mexican Gulf

Propects from world's deepest-ever oil drilling sends group shares up 4%

BP has made what it is calling a "giant" oil discovery in one of the world's deepest wells, drilled 35,000ft into rock on the sea floor of the Gulf of Mexico.

The exact size of the find at BP's Tiber prospect oilfield is awaiting technical appraisal, but the company estimates that Tiber is bigger than its prospect on the nearby Kaskida field, which has about 3bn barrels of oil reserves in place. The announcement sent the group's shares soaring by 4.26 per cent to close at 541.65p last night.

The Tiber prospect, about 250 miles south-west of New Orleans, is incredibly deep – about as far below the Earth's crust as a passenger jet flies above it – and has a 4,000ft-deep ocean on top. The multiple reservoirs found there are BP's second discovery in the so-called "lower tertiary play", which spans 300 miles across the Gulf and was deposited between 65 million and 23 million years ago. BP struck oil at Kaskida, 40 miles away, in 2006 and is investigating the site. Some industry experts have suggested that Tiber might be as large as the Forties, the biggest oilfield ever found in the North Sea, which has 4bn barrels.

Andy Inglis, BP's chief executive of exploration and production, said: "These material discoveries, together with our industry-leading acreage position, support the continuing growth of our deep water Gulf of Mexico business into the second half of the next decade."

Given the difficulty of extraction from such deep wells, only a small proportion of the oil is likely to be recoverable, perhaps as little as 10 or 20 per cent. But the estimated size of the field is so large that even a low percentage is a huge quantity of oil.

Malcolm Graham-Wood, the director of oil specialist HansonWesthouse, said: "It will take time and be expensive but, if BP gets it right, Tiber could be producing a million barrels a day in the longer term."

BP's experience in the region will count for a lot. Although the well is at an unprecedented depth, commercial exploitation will not require unproven technology, unlike Brazil's Santos Basin, which has produced a string of major discoveries but with huge technical challenges of even deeper water.

Lessons learned from BP's problematic Thunder Horse field, which took three years longer than expected to bring on stream, will also help. "BP is an expert in the Gulf," Mr Graham-Wood added. "Thunder Horse was a nightmare to begin with and took a long time to get right, but it is now spewing oil like it is going out of style."

Strategically, the find will help to fend off criticism that BP was relying too heavily on Gulf reserves as its rivals drilled in other deep-water basins, and that the group's rate of oilfield replacement was too slow.

"As production siphons reserves off, you have to keep finding new ones," Mr Graham-Wood said. "BP pinned a lot of hopes on the Gulf of Mexico and they look like they are coming good."

The Tiber prospect is operated and 62 per cent-owned by BP, while Brazil's Petrobras owns another 20 per cent and ConocoPhillips the remaining 18 per cent.

Rocks in the lower tertiary play were laid down during the Paleogene period 65.5 million to 23 million years ago, following the Cretaceous era when mammals first evolved.