A test well drilled in the Baltimore Canyon has found "significant" indications of natural gas and possibly oil, government geologists said yesterday.
The announcement by the U.S. Geological Survey follows a series of disappointing results from drilling in nearby areas of the canyon. The results from the test well seem likely to have an impact on the major oil companies' bidding for 650,000 adjacent acres that the Interior Department is expected to offer for lease next month.
"It's definitely encouraging news," said Robert Rioux, a resource evaluation specialist with the Geological Survey.
Cautioning that it is still too early to determine whether the find could be exploited commercially, Rioux said that "shows" of natural gas and possible oil from the test well have forced the Geological Survey to reappraise its estimates of how much oil and gas may be in the areas to be leased.
More important for the major oil companies now exploring for oil and gas in the Baltimore Canyon, the find revives hopes that there will be other major finds in the area, which lies off the east coast about 70 miles east of Atlantic City.
"It could change the game," said one major oil company executive who asked not to be identified.
So far, seven major oil companies have spent more than $97.1 million drilling wells in leased areas in the Baltimore Canyon. But there has been only one major find. Last July Texaco announced that it has found "significant reserves of natural gas" and is now testing another well near its first find.
Last week Gulf Oil Corp. joined Mobil, Exxon, and Shell Oil Co., which have capped exploratory wells drilled in the cluster of leased tracts in the canyon.
The surprise in the discovery was that it was made from a stratographic test well, drilled near, but not on, prospective leasing areas by private oil companies to obtain geological information.
The test well, called Baltimore Canyon B-3, was drilled by Standard Oil of California for 10 other companies that were sharing its cost of $12.6 million. Last November a similar unexpected find in an "off structure' test well was made near the Tanner Banks off southern California.
Under federal law, the Interior Department's Geological Survey must make a public announcement if oil or gas is found while drilling geological test wells.
Last Friday Interior Secretary Cecil Andrus decided to go forward with the February leases in OCS Sale 49, as the potential leasing area is called, but has not made a public announcement yet.
Recent Geological Survey estimates of the oil and gas that could be discovered in the new area indicate there may be 152 million barrels of oil and 2.5 trillion cubic feet of natural gas, equal to about 17 days of total U.S. oil imports and about 12 percent of U.S. annual gas consumption.
Rioux says these estimates are now being "updated," to reflect the new discoveries.