Gulf’s $1.5 trillion oil wildcat play marks post-spill drilling 'renaissance'
US oil output is rising in no small part because of a major deep-water oil play that turned the Gulf of Mexico’s drilling fortunes from bust to boom.
(Page 2 of 2)
Test holes show that the so-called Shenandoah Field in the Lower Tertiary could hold nearly a billion barrels of oil, three times original estimates. Fields with names like Hadrian, Moccasin, and Mad Dog may hold an additional 5 billion barrels, or more. All in all, some 15 billion barrels may be summoned from the Lower Tertiary alone, with up to 48 billion barrels of undiscovered oil still out there.Skip to next paragraph
In Pictures Life on an oil rig
Subscribe Today to the Monitor
“The deepwater Gulf of Mexico is witnessing an astonishing run of discoveries and hydrocarbon augmentation," Simmons & Co International said in a note to investors in July. "Quite a renaissance from the depths of Macondo.”
According to Bloomberg News, the run is being augmented by new technologies, including innovative seismic gear that can see more clearly through rock, and new rigs that can go so deep that the earth itself could boil water at the tip of the drill.
In two years, twice as many deepwater rigs – 60 – will be operating in the Gulf compared with just before the Deepwater Horizon disaster, and they could be pumping as much as 2 million barrels a day by 2020, according to Wood Mackenzie, Ltd., an industry research firm.
In July, the Senate Energy and Natural Resources Committee grilled oil executives about the question on most Americans’ minds: If the US output is so hot, why aren’t gas prices lower, especially given that US demand is off by 8 percent since the 2008, largely thanks to fewer driving miles and cleaner cars.
The main reason is that oil is a global market, and US demand and output are offset by consumption in oil-hungry nations like China. Refinery shutdowns and capacity have also played a role in higher prices.
Nevertheless, the increase in US production is ultimately helping to push down global prices, Adam Sieminski, director of the Energy Information Administration (EIA), an independent government agency, told the Senate in July.
While the US is now a net gasoline exporter, the nation still imports 40 percent of its crude, though that’s down from 60 percent just a few years ago.
Drilling supporters say the boom in Gulf oil has profound national security implications. Moreover, so-called US energy independence, once thought to be a pie-in-the-sky concept, has suddenly come to be seen as possible. Even getting imports down to 30 percent would be like the US buying “an insurance policy for the economy” since it would protect consumers from geopolitical vagaries in the global crude market, Jay Hakes, the former EIA head, told Congress.
Envirommentalists, meanwhile, bemoan the boom in the Gulf, saying it’s against the country’s ultimate, and long-term, interests.
“Recent trends in US energy consumption and production suggest we don't need to find more oil offshore,” Cindy Zipf, director of Clean Ocean Action, Inc., in Sandy Hook, N.J., wrote in The Wall Street Journal this summer. “Our investment dollars and energies are better spent on renewable energy, conservation and efficiencies such as improved mass transit, smart grids and clean-emission vehicles – an approach that creates jobs, doesn't damage the environment and addresses fossil-fuel-driven climate change.”
RECOMMENDED: Think you know energy? Take our quiz.