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Gulf of Mexico's Depths Beckon Not Even Storms Deter Exploration

Posted on: Friday, 14 October 2005, 12:00 CDT

By Jad Mouawad

About 150 miles southeast of New Orleans, an oil drilling ship the size of two football fields with a wide hole in its hull and a 200-foot derrick on its deck is back in operation.

Thanks to its ability to perform successfully in waters as deep as 10,000 feet, or about 3,000 meters, the Deepwater Millennium is considered the Cadillac of oil and gas exploration, allowing companies to find energy resources in remote or ultra-deep locations that were, until recently, considered out of reach.

But even as oil companies push farther out into the gulf's deeper waters, two devastating storms have recently raised questions about the risks of placing so many energy bets in this region. The gulf's entire output more than a quarter of domestic oil and gas supplies was interrupted for days after hurricanes Katrina and Rita, and still remains far below pre-hurricane levels.

Oil companies, however, are not interested in walking away. In fact, they are planning just the opposite. "The gulf's potential is well worth the risk," said Stuart Strife, manager of gulf exploration for Anadarko Petroleum, which has hired Deepwater Millennium from its owner, Transocean, to drill in the eastern gulf. "It's the premier exploration frontier in the United States."

The Gulf of Mexico is not the only region the industry wants to tap. Oil companies are pushing for the right to drill in areas that have been off-limits for over two decades, reigniting a debate over whether to lift a ban on drilling along most of the country's coastline. These areas off of California, from Georgia to Maine, and in the parts of the gulf that are close to Florida have been closed to new exploration since 1981 after a series of environmental disasters that fostered a political backlash against the oil industry.

At the heart of this dispute, which echoes the quarrel over drilling in Alaska's Arctic National Wildlife Refuge, is whether America's energy needs should be met by increasing domestic production or by encouraging more energy efficiency to limit consumption.

"They are looking to repeat the mistakes of the past," said Annie Strickler, a spokeswoman for the Sierra Club. "We cannot drill our way out of our oil dependence. We need to look at other ways, such as running more miles out of a gallon or encouraging alternative sources of energy."

Under the most conservative estimates, the United States has total proven reserves of 21 billion barrels of oil and 192 trillion cubic feet of natural gas, enough to maintain about 10 years of current production.

But the potential resources are much larger. According to government estimates, the Gulf of Mexico alone could hold as much as 71 billion barrels of ultimately recoverable oil and gas reserves. Of these, about 80 percent, or 56 billion barrels, remain to be found, mostly in deep water. An additional 23 billion barrels of oil and gas reserves may be lying offshore from California and the Eastern seaboard.

Some members of Congress have been seeking to lift the federal moratorium, arguing that this would make U.S. energy supplies more secure. But the move is unlikely to succeed in the face of a coalition of environmental groups and politically powerful coastal states like Florida and California, whose Republican governors argue that it would be detrimental to tourism and threaten the appeal of their coastlines. Oil industry executives, saying they have learned from past disasters, argue that they can now safely drill along any coastline. They contend that without a willingness to make hard trade-offs between scenery and sources of energy, U.S. prosperity would be put at risk. "People have to realize that even if we have adequate supplies, these can be disrupted," James Hackett, Anadarko's chief executive officer, said. "It's not being alarmist; it's being sober about the need for a bigger debate on energy policy."

Under the federal ban, exploration is only allowed off Texas, Louisiana, Mississippi, Alabama and Alaska. Some offshore production continues at decades-old discoveries near southern California but new drilling there is banned.

One proposal currently being circulated by Representative Richard Pombo, a Republican from California and the chairman of the House Resources Committee, would extend the current ban on offshore drilling but would permit states to opt out and allow exploration. Rigs like Deepwater Millennium are at the cutting edge of this debate. They can reach far below the sea level, then punch through an additional 20,000 feet of sediment, sand or rocks sometimes even horizontally to find oil or natural gas. As it is drilling, global positioning technology and six thrusters below the hull carefully align the ship right above the well even as wind and waves push and pull in different directions. This new generation of rigs has allowed oil companies to push out into the gulf's deep offshore region. Oil executives recognize that is where the real growth will come from, farther and farther away from shore. Though few and far between, the dozens of megaplatforms that operate in these deepest waters have turned into America's most important energy workhorses.

Typically, the gulf's offshore region produces 1.5 million barrels of oil a day, or 27 percent of the nation's domestic production. Still, that only provides 7 percent of America's total oil consumption. The Interior Department, which oversees offshore production, predicts that the gulf's output will peak at 2.25 million barrels of oil a day in 2011.

Source: International Herald Tribune

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