Monday, July 23, 2012

A New Era for Deep Sea Drilling

So far this year, upstream operators have made 22 announcements of oil and natural gas discoveries in water depths of 4,000 feet and greater, compared to 37 such discoveries in all of 2010, Simon Johnson, vice president of marketing and contracts for Noble, said during the company's earnings call July 19. The average water depth of the finds is 6,400 feet, although the deepest this year so far is offshore Mozambique in 7,400 feet of water. _Platts

After the Deepwater Horizon disaster, many analysts seemed to write off the prospects for future deepwater and ultra-deepwater energy drilling. But the 70% of the Earth's surface is covered by water, and it is to be expected that many of the rich oilfields yet to be discovered, lie deep beneath the waves.
The newest ultra-deepwater rigs coming into the market these days are equipped to drill in 10,000 feet of water, and can gear up for waters 12,000 feet deep with some added equipment. The most state-of-the-art rigs can also drill 40,000 feet below the mud line. That is well past current needs; the deepest well ever drilled so far in the US Gulf, for example, lies in about 10,000 feet of water and the deepest total depth has been about 35,000 feet. And so far, 10,000 feet is about the water depth limit of US areas now open to leasing.

But ultra-deepwater--loosely definfed as water depths of 7,000 feet and greater--isn't the only market segment doing well. Deepwater--again, loosely defined as water depths around 4,000 to 7,000 feet--also is doing well. Michael Acuff, senior vice president of contracts and marketing for driller Diamond, said rigs for that class are fetching dayrates in the high $400,000s to low $500,000s.

And even the midwater market for rigs that can drill in no more than 1,000-4,000 feet of water is performing well, and dayrates there also continue to increase, he said. _Platts

It is good to reflect repeatedly upon the fact that if not for the corrupt and incompetent state oil & gas companies of MENA, Russia, Venezuela, Mexico etc., the international oil companies might have been kept quite busy pumping all the oil they could sell, from conventional land-based wells. No other land mass on the planet has been explored for oil so thoroughly -- by a factor of one thousand -- as North America. And yet, prospectors are still finding new locations for rich wells across that "over-explored, over-drilled" continent.

It stands to reason that if the vast land expanses of Asia, Africa, Latin America, and elsewhere were explored to the same extent as North America -- and if those lands were open to production by the most highly skilled and competent oil producers on the planet -- that conventional oil production could easily put deep sea oil, tight oil, and heavy oil / oil sands out of the running.



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