US oil major, Chevron Corp yesterday approved a $7.5 billion plan to develop two large oil and natural gas fields in the Gulf of Mexico, just days after the US government lifted a the moratorium on deepwater oil and gas drilling following BP's massive oil spill.

Chevron is developing the Jack and St. Malo project located in the Lower Tertiary trend in the deepwater US Gulf of Mexico. It has working interests of 50 per cent in the Jack field, while Norway's Statoil and A P Moeller-Maersk hold 25 per cent each.

Chevron holds 51-per cent in the St. Malo field, while Statoil holds 21.5 per cent, Petroleo Brasileiro SA 25 per cent and Exxon Mobil and Eni SpA, with 1.25 per cent each.

The Jack and St. Malo fields are located within 25 miles of each other approximately 280 miles south of New Orleans, Louisiana, in water depths of 7,000 feet, which is deeper than the 5,000 feet of BP's Macondo oil well, which created one of the world's worst environment disasters.

Chevron said that the initial development of the project scheduled to start in 2014 will require an investment of approximately $7.5 billion. The Jack and St. Malo fields are estimated to contain combined total recoverable resources in excess of 500 million oil-equivalent barrels.

Chevron's decision to go ahead with the project comes barely 9 days after the US government lifted a ban on 12 October 2010 on deepwater oil and gas drilling in the Gulf Of Mexico. (See: US lifts ban on offshore drilling in Gulf of Mexico)

The ban had come into effect on 27 May 2010, a month after BP's Deepwater Horizon rig exploded on 20 April 2010 killing 11 people and its Macondo oil well spewed an estimated 200 million gallons of oil, creating one of the world's worst environment disasters.(See: BP caught in the sludge of potentially worst oil disaster in US history)

The ban was lifted only after the US government wrote new protective and stringent measures that would ensure safety in offshore drilling, which includes new standards for well design, blowout preventers, safety certification, emergency response and worker training.

It also now makes the CEO of an oil company responsible and liable in the event of future accidents as he would have to certify that his company has complied with all the new regulations.

The new rules laid down by the US government will also add on the huge cost of drilling in deepwater, but Chevron and its partners feel that they can absorb the additional costs.

BP's oil spill in 5,000 feet deepwater highlighted the fact that none of the oil companies were and still are able to contain an oil spill offshore and deep under water as none have the required technology to handle a spill that deep.

It was due to lack of technology that the BP's Macondo oil well continued to spill crude relentlessly for nearly five months.