[ad_1]
Over the past two decades, the shale revolution largely pushed aside interest in the exploration and development of offshore hydrocarbons. The combination of hydraulic fracturing and horizontal drilling enabled the United States to significantly increase its production of oil and natural gas from tight oil formations, with the Shale Patch accounting for 36% of total U.S. crude oil production. However, there are growing signs that the U.S. shale boom could be close to a peak. Whereas overall output is close to record levels, the amount of oil recovered per foot drilled in the Permian Basin of Texas fell 15% from 2020 to 2023, a pace of decline on par with a decade ago. Thankfully, this is happening just as the global offshore oil boom is taking off.
Recent big deepwater discoveries off the coast of Guyana, the Gulf of Mexico and Namibia are bringing back interest to the offshore sector. To sweeten the deal further, deepwater projects come with qualities that modern energy companies desire: lower costs, greater resource potential, longer production periods and lower levels of carbon dioxide emissions.
According to Norwegian global energy consultant, Rystad Energy, the market of the equipment for underwater oil production will grow at a 10% annual clip between 2024 and 2027. Over this period, investment into flexible tubing, subsea coil tubing, and valve assemblies will grow from $32 billion up to $42 billion, compared to $23 billion in 2021.
Related: Oil Prices Gain 2% After China Boosts Stimulus Measures
Slightly over one-third of these amounts will be invested into super-deep-water projects implemented with floating production, storage and offloading systems (FPSO). Such systems are used at Exxon Mobil’s (NYSE:XOM) Stabroek license block, where step-by-step commissioning of Liza Destiny, Liza Unity and Prosperity FPSOs allowed for growing oil production outputs from zero up to 610 k barrels per day (kbpd). Output from the block is expected to exceed a million barrels per day in the latter half of the current decade, mainly by launching new FPSOs at Yellowtail, Tilapia and Redtail oil fields. Meanwhile, the massive investment will also cover the existing super-deep-water projects, such as Argos in the US, Trion in Mexico and Egina in Nigeria.
Related: Energy Major Repsol Halts Green Hydrogen Projects in Spain
In the oil and gas exploration and production (E&P) industry, deepwater is defined as water depth greater than 1,000 feet while ultra-deepwater is defined as depths greater than 5,000 feet. Deepwater oil and gas production is set to increase by 60% by 2030, to contribute 8% of overall upstream production, according to a new report from Wood Mackenzie, as cited by Rig Zone.
Ultra-deepwater production is set to continue growing at breakneck speed to account for half of all deepwater production by 2030.
Deepwater production remains the fastest-growing upstream oil and gas segment with production expected to hit 10.4 million boe/d in 2022 from just 300,000 barrels of oil equivalent per day (boe/d) in 1990. Wood Mackenzie has predicted that by the end of the decade, that figure will pass 17 million boe/d.
Deepwater Boom
U.S. shale producer Occidental Petroleum Corp. (NYSE:OXY) and Colombia’s integrated energy company Ecopetrol S.A. (NYSE:EC) are planning to drill an offshore oil well off Colombia’s waters in seas roughly 3,900 meters (close to 13,000 feet) deep before the year is out, Bloomberg has reported. Dubbed Komodo-1, the ultra-deepwater well will qualify as the deepest offshore oil well in the world, beating Angola’s block 48 well which holds the current world-record water depth of 3,628 m (11,903 ft).
“Offshore and deepwater are currently undergoing a remarkable renaissance, driven by the imperatives of energy security, regionalization, and a maturing and disciplined North American shale supply,” James West, an analyst at Evercore ISI, wrote in a note to investors.
According to Ecopetrol’s offshore chief Elsa Jaimes, the dizzying depths reached by offshore oil wells such as Komodo-1 are made possible by improvements in marine-seismic technology that allows exploration at greater depths and distances.
Meanwhile, the China National Petroleum Corporation (CNPC), the government-owned parent company of PetroChina, and Cnooc (OTCPK: CEOHF), has kicked off ultra-deepwater exploratory drilling for oil and gas as the country looks to wean itself off of foreign oil. According to the Chinese news agency Xinhua Global Service, CNPC will drill a test borehole of up to 11,000 meters (36,089 feet), the country’s deepest-ever, which will help it better understand the Earth’s internal structure better, as well as to test underground drilling techniques.
CNPC’s borehole depth is not far from Qatar’s world record of 12,289 meters (40,318 feet) for a petroleum well depth that was drilled in the Al Shaheen Oil Field in 2008 or Russia’s Kola Superdeep well that reached a depth of 12,262 meters (40,230 feet).
By Alex Kimani for Oilprice.com
More Top Reads From Oilprice.com
[ad_2]
Source link