Peak oil means deepwater drilling is business as usual

June 6, 2010
Deep drilling – The BIG picture… we will not stop until oil is gone.

energy bulletin With Federal regulators approving a new Gulf of Mexico oil well and the Canadian government continuing to support deepwater drilling off its own coasts, it looks like business as usual for the oil industry despite media coverage of BP’s ongoing ecological disaster.
Even if the media debate switches to the realities of peak oil and the need for renewable alternatives to declining fossil fuels – or indeed the lack of regulation of the oil industry in the US, which has been compared to the financial sector before the 2008 credit meltdown – it seems a fair bet that it won’t dull our appetite for oil.
An Associated Press report Wednesday (June 2) reported that “the first new Gulf of Mexico oil well since President Barack Obama lifted a brief ban on drilling in shallow water” has been given the go ahead. It’s only deepwater projects that remain temporarily frozen. The item, APNewsBreak: Feds approve new Gulf oil well off La, states:
The Minerals Management Service granted a new drilling permit sought by Bandon Oil and Gas for a site about 50 miles off the coast of Louisiana and 115 feet below the ocean’s surface. It’s south of Rockefeller State Wildlife Refuge and Game Preserve, far to the west of the Deepwater Horizon oil rig that triggered the BP spill.

Obama last week extended a moratorium on wells in deep water like the BP one that blew out a mile below the surface in April and is gushing millions of gallons of oil. But at the same time, the president quietly allowed a three-week-old ban on drilling in shallow water to expire.

Putting this into perspective, the map (above), courtesy of the National Oceanic and Atmospheric Administration (NOAA), showing the “3,858 oil and gas platforms extant in the Gulf of Mexico in 2006” is appearing on a number of websites. Not all of these platforms are deepwater, of course.

Anyone wanting to understand the issue should turn to an 87-page Minerals Management Service document, Deepwater Gulf of Mexico 2009: Interim Report of 2008 Highlights. Essentially, the US Department of the Interior’s Minerals Management Service controls leasing of offshore oil and gas rights in the nation’s waters – these are sold to the highest bidder. This, which defines deepwater as anything in a depth greater than 1,000 feet, states:

In February 1997, there were 17 producing deepwater projects, up from only 6 at the end of 1992. Since then, industry has been rapidly advancing into deep water, and many of the anticipated fields have begun production. At the end of 2008, there were 141 producing projects in the deepwater Gulf of Mexico.

If 141 producing deepwater projects in that area seems larger than expected, note that there are many more leases on oilfields in the area – 7,310 active leases in 2008 – and that the trend is towards ever deeper water. The document continues:

Over the last 15 or so years, leasing, drilling, and production moved steadily into deeper waters. There are approximately 7,310 active leases in the U.S. GOM, 58 percent of which are in deep water. (Note that lease statuses may change daily, so the current number of active leases is an approximation.) Contrast this to approximately 5,600 active GOM leases in 1992, only 27 percent of which were in deep water. There was a maximum of 31 rigs drilling in deep water in 2008, compared with only 3 rigs in 1992. Likewise, deepwater oil production rose about 786 percent and deepwater gas production increased about 1,067 percent from 1992 to 2007. Production from seven deepwater fields began in 2008, including Thunder Horse, the largest daily producer in the GOM.

Much of the future development is likely to be at depths much greater than BP’s well in the Mississippi Canyon – which is in 5,000 feet (1,500 m) of water. As the Deepwater Gulf of Mexico document states: “Shell Oil Company set a world water depth record in drilling and completing a subsea well 9,356 ft (2,852 m) below the water surface in the Silvertip project at the Perdido Regional Host facility in Alaminos Canyon.”
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