By Steve Gelsi 
   MarketWatch

NEW YORK (MarketWatch)-- BP PLC's (BP) fresh discovery may signal new prospects to come in the deeper waters in the Gulf of Mexico as technology improves for delving into the depths of the earth.

With close-to-the-surface oil mostly tapped out around the world, oil and gas giants and state-run oil majors are scrambling to find new deposits miles underground in offshore Brazil, the Gulf of Mexico, the North Sea, West Africa and elsewhere.

BP said Wednesday it drilled six miles into its Tiber well via a semi-submersible rig operated by Transocean (RIG) to a make a "giant" discovery.

A spokesman for the oil major compared the Keathley Canyon find to its Kaskida find, which had 3 billion barrels of oil equivalent and was drilled to a depth of 32,500 feet.

John Kingston, director of oil for Platts, said BP has been aggressively bidding for leases not far from the Tiber well.

"That's a signal that the whole area may become a very solid place for exploration," he said.

Unlike other parts of the Gulf serviced by pipelines, the Tiber well lacks infrastructure and will take at least five years to develop, he said.

Transocean said it was the deepest ever drilled, not only in the Gulf of Mexico but anywhere.

The record for the Gulf had been set in 2005 by Chevron's Knotty Head well with a total depth of 34,189 feet. BP said it drilled to 35,055 feet in its latest discovery.

A Chevron spokesman declined to comment on whether the oil major would resume drilling at Knotty Head after it suspended activity in 2008.

The depths could be just a taste of the depths to come.

While the rig BP used in its latest discovery operates in up to 10,000 feet of water, Chevron recently started using a new Transocean drill ship capable of operating in up to 12,000 feet of water and drilling to a total depth of 40,000 feet.

While actual oil development from BP's Tiber well will be years away, the block will likely provide a huge payoff for the oil major.

BP paid only $406,060 for Block 103 in the Keathley Canyon about 250 miles southeast of Houston as the single bidder in the 2003 Western Gulf of Mexico auction held by the U.S. Minerals Management Service, according to a government spokeswoman.

The cost for the site lease wouldn't even cover one day's worth of drilling, which costs $458,000 to $517,000 for each 24-hour period.

Leta Smith, director of the exploration and production forum for IHS CERA, said the BP discovery raises the prospects for the Lower Tertiary region, first heralded by Chevron's Jack discovery.

"People are always continuing to look for oil and gas, and this Lower Tertiary play is still in its infancy," Smith said. "This is only the 18th discovery in this play."

Besides Chevron and BP, Royal Dutch Shell and Petrobras are developing wells in the lower tertiary, she said.

Steve Gelsi is a reporter for MarketWatch in New York.