Drilling Deep in the Gulf of Mexico
NY Times 2006
The next oil frontier – and the next great challenge for oil explorers – lies below 10,000 feet of water, through five miles of hard rock, thick salt and tightly packed sands

Thanks to advances in offshore technology, and tremendous leaps in supercomputers and three-dimensional imaging, this region’s deepest waters have become the hottest exploration prospects in the nation. According to the most optimistic estimates, there could be 40 billion barrels of undiscovered reserves in the deep water, which starts at about 1,500 feet, enough to satisfy American consumption for more than five years. Since 2001, there have been 12 discoveries in waters 5,000 feet deep, drilling into older rock formations known as the Lower Tertiary.

The geology has been proven, the oil is present. Drilling costs have soared in recent years and can now reach as much as $800,000 a day, or up to $100 million for a single well. BP made the biggest discovery in the Gulf of Mexico. The field, holding one billion barrels of reserves, became known as Thunder Horse. The wider hunt has been on ever since. The easy oil is running out because it has already been found.

Mexico Looks to Play Catchup with Deepwater Exploration
Rigzone 2009
While the U.S. has spent two decades scouring the deep waters of the Gulf of Mexico for oil, neighboring Mexico is just getting started. Output from Mexico's traditional fields is in free fall, forcing state-run Petroleos Mexicanos to move into more difficult terrain in an effort to maintain its status as a major crude exporter.

U.S. exploration has pushed up against the maritime border with Mexico, putting Mexico at risk of losing oil in reservoirs that straddle the boundary line. This means U.S. oil companies could pump Mexican oil if Mexico fails to develop its side of the reservoirs. Oil could gravitate from the Mexican side to wells in the U.S., a process known as drainage.

Dearth of Ships
Delays Offshore Oil
NY Times 2008
Even as oil trades at more than $135 a barrel – up from $68 a year ago – the world’s existing drill-ships are booked solid for the next five years. Some oil companies have been forced to postpone exploration while waiting for a drilling rig. As a result, drilling costs for some of the newest deepwater rigs in the Gulf of Mexico – the nation’s top source of domestic oil and natural gas supplies – have reached about $600,000 a day, compared with $150,000 a day in 2002. 16 new drill-ships are scheduled to be delivered to oil companies this year — more than double the number delivered over the last six years combined. Demand is so high for drill ships that builders have raised prices as much as $100 million per vessel since last year. In the 1990s, low oil prices and overflowing oil supplies led oil companies to cut back on exploration drastically. “It will certainly mean more drilling activity and more discoveries in the deepwater side,” said Tom Kellock, the head of consulting and research at ODS-Petrodata.

Deepwater Oil Fields a Final Frontier
USA Today 2008
Chevron has leased a mobile drilling rig, which displaces more water than one of the Navy's Nimitz-class carriers, to ready for production half a dozen wells scattered across the ocean floor in 4,000 feet of water. The good news is that there's plenty of oil in such deposits, especially in the Gulf of Mexico and off the coasts of Brazil and West Africa. The bad news is that much of that valuable crude lies in complex geologic formations, hidden beneath a mile or more of troublesome salt layers – meaning these new reservoirs will be costly to develop. All of the easy oil has been found or used. Now, drillers must navigate 4,000 feet of water and an additional 20,000 feet of sand, rock and salt to find what the Earth has left. Last year, 130 deepwater projects produced oil, up from 17 a decade earlier, according to Minerals Management Service, the Interior Department agency that leases offshore parcels. By 2015, Chevron expects deepwater wells to account for one-quarter of offshore oil production vs. 9% today. Almost one-third of the world's deepwater rigs are active in the Gulf. Many are prowling an ancient formation called the Lower Tertiary, which sprawls from Texas and Louisiana far offshore and could hold up to 2.8 billion barrels of hydrocarbons. Chevron's Tahiti field is scheduled to begin producing 125,000 barrels a day next year.

Thunder Horse Full Production by 2009
Reuters 2008
British oil major BP Plc said its giant Thunder Horse field in the U.S. Gulf of Mexico was currently producing over 40,000 barrels of oil per day and would reach full capacity of 250,000 bpd by the end of 2009. Exploration boss Andy Inglis said, "You need six to eight wells to fill the facility and we'd anticipate getting there by the end of 2009," The long-delayed field, 150 miles southwest of New Orleans, will also produce a maximum of 200 million cubic feet per day of natural gas when it reaches peak production.

Mexico's Demand for Oil Rigs Picking Up
Rigzone 2008
For decades state-run Petroleos Mexicanos has milked the giant, easy-to-develop oil fields in the shallow waters of the Gulf of Mexico. But with many of these fields already past peak production, Pemex, as the company is known, must now move into more geologically challenging areas where each individual well produces less oil. This means Pemex needs to expand its rig fleet just to try and halt the steady decline in output that began in 2004. Pemex is now hiring drillers to develop areas of the country it ignored for decades, such as the Chicontepec basin in the north and new fields in the south of the country.

Big Oil Find Cements Gulf's Revival
Wall Street Journal 2009
BP PLC announced a major new oil find in the Gulf of Mexico, the latest in a string of discoveries there. BP said its Tiber prospect, about 200 miles due south of Lake Charles, La., is a "giant."

Just two decades ago, the Gulf of Mexico was called the "Dead Sea" by an industry that believed it had already offered up all its big discoveries. But now it is again front and center for petroleum explorers.

As new technologies have enabled exploration in the deepest recesses of the Gulf, nearly a dozen discoveries, including BP's Tiber, have been made beneath nearly two miles of water.

The technological wizardry required to suck oil from the ancient rocks, known as the Gulf's lower tertiary, underscores how extraordinarily expensive it is to develop these prospects. To drill each well costs about $200 million, industry executives said. And a prospect often requires several wells, plus expensive pipelines and floating facilities.

Deepwater Oil Fields Are a Final Frontier
ABC News 2008
Securing new oil supplies from deep, distant spots such as the field code-named Tahiti is critical. That's why Chevron has leased the Cajun Express mobile drilling rig, which displaces more water than one of the Navy's Nimitz-class carriers, to ready for production half a dozen wells scattered across the ocean floor. The good news is that there's plenty of deepwater oil, especially here in the Gulf of Mexico and off the coasts of Brazil and West Africa. By next year when Tahiti begins sending oil to anxious consumers ashore, Chevron expects to have invested $4.7 billion in this project. Last year, 130 deepwater projects produced oil, up from 17 a decade earlier. By 2015, Chevron expects deepwater wells to account for one-quarter of offshore oil production vs. 9% today. There is a global shortage of drilling rigs, the legacy of investment-chilling low oil prices a decade ago, when crude dipped below $12 a barrel. Some promising fields are going unexplored. Almost one-third of the world's deepwater rigs are active in the Gulf. Chevron's Tahiti field is scheduled to begin producing 125,000 barrels a day next year.

Quest for
Deepwater Oil
PBS Nightly Business Report 2007
America's thirst for fuel is driving major oil companies to drill in some of the deepest waters of the Gulf of Mexico. The payoff could be huge: Experts say as much as 60 billion barrels of oil may lie in the deep waters of the Gulf. In a 3-part series, NBR takes a look at this new oil frontier and the challenges.

Lease Sales in Gulf Attract Billions
Rigzone 2008
Two federal sales of offshore oil and natural gas leases in the Eastern and Central Gulf of Mexico attracted more than $3.7 billion. One of the sales inaugurated enhanced revenue sharing with Gulf states. Minerals Management Service received $64.7 million in high bids for Eastern Gulf of Mexico Sale 224, with an estimated 37.5% going directly to four Gulf producing States. In addition, 12.5% of revenues from today's lease sales will be deposited into the Land and Water Conservation Fund for use by states to enhance parklands and conservation projects. Lease Sale 224 encompasses 546,971 acres located 125 statute miles and greater offshore in water depths ranging from 2,657 feet (810 meters) to 10,213 feet (3,113 meters). We expected strong interest in the deepwater and ultra-deepwater areas of the Central Gulf," said Randall Luthi, Director of the MMS. "This high level of interest is being sustained by the information gained through new discoveries and the advancements in deepwater technology."

Newfoundland selling deepwater rights
Bloomberg 2008
Newfoundland, Canada's No. 3 oil- producing province, plans to auction offshore drilling rights in deeper waters as record oil prices encourage producers to explore remote areas. Bids are due in November for exploration rights in waters as deep as 2,000 meters (6,562 feet). The region is estimated to contain 1.7 billion barrels of oil.

Mexico Pemex urges deep-sea drilling
Reuters 2008
Mexico's state oil company has urged lawmakers to approve an energy reform to spur on deepwater production. Carlos Morales, head of exploration and production at oil monopoly Pemex, said that going after crude oil in the deepest parts of the Gulf of Mexico was crucial to maintaining output levels as Mexico's largest oil fields decline. "Mexicans have to understand that the age of easy oil is over."Mexico is the world's No. 6 oil producer and a key U.S. supplier, but Pemex's crude output has been dropping since 2004 as yields decline at its huge but aging Cantarell field.

Cramped on Land, Big Oil Bets at Sea
Wall Street Journal 2010
Major oil companies are moving ever farther from shore in search of oil. That quest is paying off as these companies discover unexpectedly large quantities of oil -- oil that only they have the technology and financial muscle to find and produce.

Production from deepwater projects -- those in water at least 1,000 feet deep -- grew by 67%, or by about 2.3 million barrels a day, between 2005 and 2008, according to PFC Energy, a Washington consulting firm.

The discoveries come as many of the giant oil fields of the past century are beginning to dry up, and as some experts are warning that global oil production could soon reach a peak and begin to decline. The new deepwater fields represent a huge and largely untapped source of oil, which could help ease fears that the world won't be able to meet demand for energy, which is expected to grow rapidly in coming years.

Definitions...
Deepwater Oil
Houston Chron 2008
72 percent of the crude oil produced in the Gulf now comes from deepwater fields which the government defines as in more than 1,000 feet of water. Today, many in the industry are focused on the challenges involved in operating in water depths up to 10,000 feet. Some drilling companies now use "midwater" to describe water depths between 1,000 and 5,000 feet and deepwater is anything beyond. Some use "ultra deep" water to refer to water deeper than 5,000 feet.

Day Rate
Drill rig owners drill and complete offshore oil and gas wells for major international, government-owned and independent oil and gas companies on a "day rate" contract basis, under which they provide drilling rigs and rig crews and receive a fixed amount per day for drilling the well. Customers bear substantially all of the ancillary costs of constructing the well and supporting drilling operations, as well as the economic risk relative to the success of the well.

Jackup Rig
Jackup rigs stand on the ocean floor with their hull and drilling equipment elevated above the water on connected leg supports. Jackup rigs are generally preferred over other rig types in water depths of 400 feet or less, primarily because jackup rigs provide a more stable drilling platform with above water blowout prevention equipment. Premium jackup rigs are generally defined as rigs capable of drilling in water depths of 250’ and greater and are of independent leg design. Cantilever jackups allow the drilling equipment to extend outward from the hull over fixed platforms enabling drilling of both exploratory and development wells.

Semisubmersible Rig Semisubmersible rigs are floating offshore drilling units with pontoons and columns that, when sea water is permitted to enter, cause the units to be partially submerged to a predetermined depth. Semisubmersible rigs can be held in a fixed location over the ocean floor either by being anchored to the sea bottom with mooring chains or dynamically positioned by computer-controlled propellers or "thrusters."

Drillship
Drillships are specially built seagoing vessels that also drill in waters as deep as 10,000 feet. The well is drilled through an opening (called a “moon pool”) that extends to the water’s surface below the derrick. Because of their cargo-carrying capacity and exceptional mobility, drillships are especially useful for drilling exploratory wells. Although they are not as stable as semisub-mersibles in rough water, they can be moved from location to location much faster. They maintain their position through mooring or dynamic positioning systems.
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The Oil Frontier
Technology Review 2006 We're getting smarter about finding and extracting oil. 4,300 feet above the seafloor, floats Discoverer Deep Seas. Leased by Chevron, it's a ship that would have been too expensive 10 years ago…the ship is big, 835 feet long —on end, it would be the height of an 80-story skyscraper— and 125 feet wide ..drilling costs Chevron around $500,000 a day. Casing, for instance, costs around $100 per foot. The drill bits run around $80,000 each, and there are 140 to 175 well-paid people onboard, from cooks to highly trained geologists. Developing the Tahiti field will cost about $3.5 billion. The term "deepwater" generally refers to wells drilled in more than 1,000 feet of water, and Chevron, like all the big oil companies, has kept a wea-ther eye on deepwater prospects for years. An exploration well in the leased Green Canyon region, for instance, was drilled in March 2002, and it went down 28,411 feet, through a two-mile-thick layer of salt and into a 400-foot-deep pay zone of sand and oil. The pay zone looked to be 1,000 feet thick and 7.5 square miles in size. If all goes well, Tahiti ought to be about a 500-million-barrel field, a huge find in today's market. From 1997 to 2003, the number of deepwater projects in the Gulf of Mexico grew from 17 to 86. The number of ultradeep-water projects in the gulf, those in more than 5,000 feet of water, has more than doubled in the last two years alone. In the past 10 years, as inshore wells have slowed down, deepwater oil production has risen more than 840 percent. Although Chevron considers the 500-million-barrel Tahiti field an "elephant" of a find, for example, elephants aren't what they used to be. Saudi Arabia's Ghawar field, which was tapped in 1951, has already yielded some 54 billion barrels and may have 70 billion more. The United States alone, meanwhile, consumes roughly 20 million barrels of oil every day.

Injection extends Gulf of Mexico oilfield
Bloomberg 2008
Royal Dutch Shell Plc, Europe's biggest oil company, said it extended the life of its Gulf of Mexico oilfield by 10 years after injecting water to push out displaced crude. Water is being pumped from the Ursa rig about 100 miles (160 kilometers) off the U.S. coast, to flush out oil. With a listed volume enhancement capacity of 30,000 barrels of oil equivalent per day, the waterflood is expected to extend the life of the field by 10 years, according to Shell.