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BP announced earlier this week the discovery of what could prove to be a ground-breaking shale gas basin.

The Mancos Shale in northern New Mexico has been the site of a highly productive well test, which over a 30-day period hit an average production rate of 12.9 million cubic feet per day; a figure which beats the horizontal wells in the highly prolific Eagle Ford shale, which often sees wells producing 8 to 12 million cubic feet per day.

BP Shale gas basin

(Image via BP)

The NEBU 602 Com 1H test well was drilled with a 10,000-foot lateral in an area known as the Northeast Blanco Unit (“NEBU”), a section of federal lands located in San Juan and Rio Arriba counties of New Mexico, where BP has had a presence since the 1920s.

Should the results of the test well bear out across the rest of the basin, BP may have discovered a massive new source of US shale gas.

Commenting on the discovery, Dave Lawler, CEO of BP’s US Lower 48 onshore business, said:

“We are delighted with the initial production rate of this well. This result supports our strategic view the significant resource potential exists in the San Juan Basin, and gives us confidence to pursue additional development of the Mancos Shale, which we believe could become one of the leading shale plays in the US.”

According to the USGS (US Geological Survey), the Mancos Shale holds an estimated 66.3 trillion cubic feet of natural gas, which would make it the second largest shale play in the US, just behind Marcellus.

The ongoing shale boom

The US is experiencing an ongoing shale boom as operators continue to exploit the rich reserves of the Permian basin, Marcellus formation and others.

BP appears to be confident that in can make its newest shale discovery work, even at low gas prices. BP has informed investors that its gas business in the lower-48 states is making money even at prices below $3 per million British thermal units.

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