The next oil frontier lies below 10,000 feet of water

Every 17 seconds, a small armada of ships trawling 130 miles from the Louisiana coast fire powerful air guns toward the bottom of the sea in a hunt for the next big oil discovery.
The Neptune and three other ships are on a three-month mission to map one of the most remote regions of the United States. The data they collect from the vibrations set off by the guns in the gulf’s deepest waters will help engineers form a picture of some of the world’s newest petroleum prospects.

As oil consumption grows and access to most oil-rich regions becomes increasingly restricted, companies are venturing farther out to sea, drilling deeper than ever in their quest for energy. 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.
To picture the challenge, imagine flying above New York City at 30,000 feet and aiming a drill tip the size of a coffee can at the pitcher’s mound in Yankee Stadium. Then imagine doing it in the dark, at $ 100 mm a go.

Even after hitting pay dirt, it will take another decade and billions of dollars to transform oil from these ultra-deep reserves into gasoline. Some of the technology to pump the sludge from these depths, at these pressures and temperatures, has not yet been developed; only about a dozen ships can drill wells that deep, and no one knows for sure how much oil is down there.
While most people regard affordable and abundant supplies as an essential element of the nation’s prosperity, few realize how complex and costly the quest has become, even in the nation’s own backyard. At the same time, some experts argue that the industry is nearing the limits of what it can do to maintain a growing supply of fossil fuels.

But for the geologists, scientists and explorers who work in the Gulf of Mexico, the history of the deep water holds another lesson: technological breakthroughs have always breathed new life into the energy industry. Thanks toadvances 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.
Barely more than a decade ago, the area was called the Dead Sea and was nearly abandoned as the major energy companies left for better prospects in Russia and the Caspian Sea basin.

In fact, the region’s output would have peaked and started slipping long ago without the leaps that have driven the search for offshore oil and natural gas. While production from the Gulf’s shallow waters is declining, deepwater production is on an upswing. Altogether, the Gulf of Mexico accounts for more than 25 % of the nation’s oil production and 20 % of its natural gas output.
According to the most optimistic estimates, there could be 40 bn 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. These reserves might lift the offshoreoutput to 2.2 mm bpd by 2012, up from 1.5 mm barrels today.

In October, Royal Dutch Shell announced that it would develop three ultradeep discoveries 200 miles south of the Texas coastline. The project, called Perdido, will tie together fields called Great White, Tobago and Silvertip, and is projected to have a daily capacity of the equivalent of 130,000 barrels of oil by the turn of the decade.
Some of the earlier doubts about production in the Lower Tertiary were recently lifted when Chevron successfully tested its Jack field. The test proved that oil could flow in commercial quantities from sediments deposited as long as 65 mm years ago.

Part of the problem for deep exploration in the Gulf of Mexico is a thick layer of salt -- 15,000 feet deep in some places -- that extends unevenly under the Gulf’s waters. The salt acts like frosted glass when geologists try to see through it, blurring their view of untapped oil reserves thought to lie below. A clear image of the subsea salt can make the difference between a successful discovery and a dry well.
At BP’s sprawling campus in a Houston suburb, geologists take many years looking for oil before drilling a single well. They are counting on huge leaps in processing power from computer networks that allow scientists to make sense of the complex seismic data acquired by ships like the Neptune.

The more sophisticated data is necessary because drilling costs have soared in recent years and can now reach as much as $ 800,000 a day, or up to $ 100 mm for a single well. Those costs raise the risks when, on average, only one in every three to five wells turns up oil.
Chevron, for example, expects to spend $ 3.5 bn on its Tahiti project, which should start production in 2008. BP invests more than $ 2 bn a year in the Gulf and devotes 40 % of its global exploration budget here. From 1992 to 1997, the company acquired dozens of new leases from the government, spurred by a new royalty relief program that provided extra incentives to encourage deepwater exploration. On July 4 that year, the BP well reached its final depth of 29,000 feet, after having gone through 6,000 feet of water and 2,500 feet of salt. There, BP made the biggest discovery in the Gulf of Mexico. The field, holding 1 bn barrels of reserves, became known as Thunder Horse.

The wider hunt has been on ever since. On the Neptune’s deck, the repetitive beat of the air guns can barely be heard. But below the sea, the vibrations travel deep inside the earth’s crust. Then they bounce back and are picked up by streamers of densely packed electronic sensors, stretching four miles behind the ship.
Inside, working in cool temperature-controlled rooms, dozens of engineers control the ship’s position, collect the seismic data and begin forming a picture of the earth’s geological layers.