"We think it holds really great potential, but it's going to be very difficult," said Shaw.

There have been promising discoveries by several companies, but first on the list for BP is Kaskida, in 5860 feet (1786 metres) of water 250 miles (400 kilometres) southwest of New Orleans.

The August 2006 find is the biggest to date in the Lower Tertiary with at least 3 billion barrels of oil in place, Shaw said, and now it is time to show how big a producer it can be.

In 2011, BP plans a pioneering "frac" of the oil-bearing formation more than 26,000 feet under the seafloor.

Teams will pump in massive amounts of fluids to fracture the rock, hoping to boost flow rates, Shaw said.

"It's not just about Kaskida. It's going to give us a huge amount of knowledge and learning actually for the rest of the Paleogene (Lower Tertiary)," Shaw told Reuters.

The risk is not small, but succeeding on the frontier requires expecting unforeseen problems and then working persistently to overcome them, Shaw said.

"One way I think about this is, if I look back at when we discovered Thunder Horse in 1999, we did not have the technology to develop Thunder Horse, and here we are 10 years later, it's onstream. It's performing very well," he said.

Thunder Horse was delayed three years by a hurricane and then by technical problems, is now producing 300,000 barrels of oil equivalent per day.

Shaw's ultimate goal is to drive BP's net output in the Gulf to at least 450,000 boed and keep it there, up from 200,000 boed in 2000.

Going beyond that depends largely on success in the ultra deep and the costs and technical challenges mean only the biggest companies will be able to compete, Shaw predicted.

"A lot of companies will not be successful," he said.

"It'll be interesting over the next couple of years who stays with it and who basically makes a choice of, 'Too difficult,'" he said.

Published: 17 August 2009 20:01 GMT  | Last updated: 17 August 2009 20:41 GMT