Technology Sparks Gulf Drilling
The Gulf of Mexico is in the midst of a second oil rush - one made possible by football-field-size platforms that drill for oil at previously unimaginable depths and supercomputers that locate once-invisible reserves.
The explosion of activity in the Gulf has been largely unheralded as the U.S. oil giants pursue higher-profile opportunities in Russia and an Alaska arctic refuge.
Just a few years ago, the Gulf was written off. But these new discoveries promise a significant boost to the sagging oil-exploration industry and the possibility of reducing America’s dependence on foreign imports.
“Overall it could be larger than Prudhoe Bay (the 12 billion-barrel Alaska deposit),” said Richard Patarozzi, head of deep-water operations for Shell Offshore Inc. “It’s a significant amount of oil.”
Shell, Texaco, Amoco and Exxon are pouring billions of dollars into new exploration and drilling in waters once considered too deep for development and in regions where oil was hidden beneath massive layers of salt.
The early results are remarkable.
Thirty-five discoveries have been made in depths greater than 1,500 feet, with the potential for 3.5 billion barrels of new oil, industry executives say. Until recently, most oil wells in the Gulf were drilled at depths of several hundred feet.
According to Interior Department and industry estimates, there could be as much as 18 billion barrels of oil and natural gas equivalent in the deep waters just outside the Continental Shelf from Texas to Alabama.
Ten oil companies have staked out 1,600 deep-water leases in the Gulf. Of the 35 confirmed deep-water discoveries, 19 are owned exclusively or in part by Shell.
The rental price for scarce deep-water exploratory drilling rigs soared from $40,000 a day just three years ago to $100,000.
“There are only 22 rigs in the world capable of drilling in those depths, and all of them are under contract,” said Bruce Applebaum, manager of Texaco’s offshore division. His company recently announced a $100 million lease for a major deep-water drilling ship to guarantee availability for the next three years.
The race to stake new claims has given an economic boost to coastal cities hit hard when the last Gulf oil boom ended.
At J. Ray McDermott Co. in Morgan City, a backlog runs well into next year for drilling platforms. “I could put on 200 more people, but I can’t find them,” said Donald Patureau, superintendent at the company’s fabrication yard.
The intense competition for new government oil leases reminds some of the boom years of the early 1980s.
“We have been inundated with paperwork from companies asking for new plans to drill,” said Chris Oynes, regional director of the federal Minerals Management Service in New Orleans.
A year ago, oil executives in business suits braved a killer storm and even waded shoulder deep in flood waters to a government auction where they put down $307 million for Gulf oil leases, three times what the government expected.
Last September’s sales also were brisk, and officials expect strong interest in another lease auction later this spring.