June 13 (Bloomberg) -- Chevron Corp., the second-largest U.S. oil company, won't resume drilling at Jack, a Gulf of Mexico oil field that may unlock reserves to rival Alaska's Prudhoe Bay, until late this year or early 2008 because of a shortage of rigs.

The company halted work in August because it needed to use the Cajun Express rig to finish another project. It planned to resume drilling next month. A scarcity of rigs that can bore 6 miles below the seabed forced a second postponement, Chevron spokesman Mickey Driver said in an interview today.

The rig shortage means a longer wait before U.S. refiners gain access to the oil in Jack and dozens of adjacent fields in the Gulf. Chevron's successful test of a 20,000-foot well at Jack last year showed that 3 billion to 15 billion barrels of previously unreachable crude could be tapped.

``We absolutely won't start up at Jack this summer,'' Driver said in an interview from Houston. ``There's still a very tight market out there for these rigs.''

There are only 33 drillships and other vessels that can drill in waters as deep as those above the largest reserves of oil in the Gulf of Mexico, according to Rigzone, which tracks global rig markets. Another 48 are under construction.

Transocean Inc., which supplied the rig used to drill last year's Jack well, ``has no rigs available this year, almost none in 2008 and very little in 2009,'' said Philip Weiss, an analyst at New York-based Argus Research Corp. who rates Chevron shares a buy and doesn't own any. ``Given those conditions, it's not surprising to see Gulf of Mexico projects being pushed back.''

More to Prove

The delay at Jack means Chevron has even more to prove to investors in 2008, when five major oil and natural-gas projects are scheduled to begin production in the Nigeria, the Congo, Australia and the Gulf of Mexico, Weiss said today in a telephone interview.

``Next year is when things are supposed to really come to fruition for Chevron,'' Weiss said. ``They went through a little bit of a slow period.'' The company's worldwide oil and gas output fell an average of 1 percent a year for the past five years.

Chevron hasn't decided whether to rent another rig or use one of the vessels already under lease to its partners in Jack, Devon Energy Corp. and Statoil ASA, Driver said.

The company has said it will cost about $3 billion to develop Jack.

Shares

Shares of Chevron rose 59 cents to $81.15 in New York Stock Exchange composite trading, retreating from a gain of as much as 99 cents earlier in the session. The stock rose 43 percent in the past year, the third-best performance in the 13-member Amex Oil Index behind Marathon Oil Corp. and Exxon Mobil Corp.

San Ramon, California-based Chevron operates Jack and owns 50 percent of the project. Devon, based in Oklahoma City, and Norway's Statoil each owns 25 percent. The field, which holds an estimated 500 million barrels of oil, is about 270 miles southwest of New Orleans.

Chevron, which triggered the energy boom in Saudi Arabia with the 1938 discovery of oil in the kingdom, halted work at Jack last year because it needed the Cajun Express to help finish drilling wells at the $3.5 billion Tahiti field.

Bill Thornburg, Chevron's senior drill-site manager on the Jack and Tahiti projects, said in a December interview that he expected to resume drilling at Jack in July.

Single Platform

Tahiti, which holds 400 million to 500 million barrels of crude, is expected to begin production in the second or third quarter of 2008. Chevron is spending about $1.6 million a day to lease, staff and supply the Cajun Express and the Discoverer Deep Seas drillship working on Tahiti. Houston-based Transocean owns both vessels.

Chevron may pump oil from Jack and a nearby discovery known as St. Malo through a single floating platform to reduce costs, Driver said. The company plans to use the next well it drills at Jack to help decide what sort of platform will work best and how large it needs to be, he said.

The St. Malo field, discovered by Unocal Corp. in 2003, was originally expected to begin production two years ago. Chevron became operator of St. Malo and more than tripled its stake in the project to about 41 percent with the $20 billion acquisition of Unocal in August 2005.

``A year or a year and a-half from now, we'll have a much better idea about what the production profile of this field is going to look like,'' Driver said.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net

Last Updated: June 13, 2007 16:15 EDT