WASHINGTON (AP) – Move over, Alaska. Geoscientists have made what may be the nation’s largest oil discovery off the coasts of Louisiana and Texas.

Angela Cesere
This June 2006 photo provided by Devon Energy Corporation shows the Jack 2 well located in the Gulf of Mexico, approximately 170 miles southwest of New Orleans in approximately 7,000 feet of water. (AP PHOTO)

It could be the biggest domestic oil find in 38 years, but production is years away, and even then it won’t reverse America’s growing reliance on imports or have any meaningful effect at the gasoline pump.

A group led by Chevron Corp. has tapped a petroleum pool that lies 270 miles south of New Orleans – and almost four miles beneath the ocean floor – in a region that could hold as much as 15 billion barrels of oil, or more than Alaska’s Prudhoe Bay.

“It confirms a new frontier, a new horizon in the ultra-deep water,” said Daniel Yergin, chairman of Cambridge Energy Research Associates and author of “The Prize,” the Pulitzer Prize-winning history of the oil industry. “It isn’t energy independence,” he added.

Nevertheless, the announcement of a test well that sustained a flow rate of more than 6,000 barrels per day is a boon to Western oil companies at a time when they are finding it harder and more expensive to gain access to countries such as Russia and Venezuela, and when foreign supplies are increasingly at risk because of political unrest across Africa and the Middle East.

The proximity of the Gulf of Mexico to the world’s largest oil consuming nation makes the new discovery extra attractive to the industry; however, analysts said the new find could bring pressure on Florida and other states to relax limits they have placed on drilling in their offshore waters for environmental and tourism reasons.

Chevron estimated that the 300-square-mile region known as the lower tertiary, a rock formation that is 24 million to 65 million years old, contains between 3 billion and 15 billion barrels. The upper end of that range would be enough oil to expand the country’s reserves by 50 percent. But the first drop of oil from the lower tertiary isn’t expected to hit the market until at least 2010 and at best it will only slow the decline in annual U.S. production.

Some analysts urged caution in inferring too much, too soon.

“One well doesn’t tell you a lot of information,” said Matthew Simmons, a Houston investment banker and author of “Twilight in the Desert: the Coming Saudi Oil Shock and the Global Economy.”

At its height in 1988, the Prudhoe Bay field produced an average of 1.6 million barrels per day; in 2005, it yielded less than 400,000 barrels per day. (An Alaska wildlife refuge the industry has sought to drill is believed to contain some 10 billion barrels.)

Output from the lower tertiary could eventually reach 750,000 barrels a day, or more, analysts said, but it won’t significantly dent the country’s energy imbalance.

“It’s a nice positive, but the U.S. still has a big difference between its consumption and indigenous production,” said Art Smith, chief executive of energy consultant John S. Herold. “We’ll still be importing more than 50 percent of our oil needs.”

While the industry was mostly upbeat about the potential of this new discovery, it also acknowledged some challenges, including a dearth of rigs capable of drilling in such deep water and the long lead times required to drill and complete deep-water wells.

The U.S. consumes roughly 5.7 billion barrels of crude-oil in a year, while its reserves currently exceed 29 billion barrels, according to the U.S. Energy Department. To put that into perspective, Saudi Arabia’s reserves are believed to exceed 250 billion barrels.

Chevron’s test well, called “Jack 2,” was drilled in about 7,000 feet of water. Chevron has a 50 percent stake in the field, while partners Statoil ASA of Norway and Devon Energy Corp. of Oklahoma City own 25 percent each.

The financial implications of “Jack 2” and other prospects in the lower tertiary are most significant for independent oil and gas producer Devon, which is the smallest of the three partners. Devon’s shares soared about 15 percent on the New York Stock Exchange.

“Relative to its size, Devon has one of the greatest exposures to the deepwater Gulf of Mexico,” said Oppenheimer & Co. analyst Fadel Gheit.

That said, many companies, including BP PLC, Exxon Mobil Corp. and Anadarko Petroleum Corp., stand to benefit from their own projects in the lower tertiary. “If the current thinking is correct, this is only a beginning,” Gheit said.

The well was drilled in the Walker Ridge area of the Gulf, 175 miles off the coast of Louisiana. It is an area the industry has been exploring for about five years.

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