Pushing Frontiers of Oil Exploration

Drillers Going Off Deep End in Gulf

PINCHED by declining reserves and environmental curbs on exploration, some of the biggest oil companies in the United States are banding together to go where no petroleum explorers have gone before.

In an engineering effort that parallels the early days of the Apollo moon mission, ''Project DeepStar'' is an attempt to tap the deepest regions of the Gulf of Mexico.

If successful, the offshore venture could produce tens of thousands of jobs and stem the US slide into foreign oil dependence.

''What we've done so far is like the Mercury sub-orbital flights that went around the earth,'' says Project DeepStar director Curtis Burton, comparing current deep-sea drilling technology to the earliest NASA flights. ''Now, we're poised to launch the moon shot.''

Using some of same technology developed by the National Aeronautics and Space Administration, Deepstar plans to send remotely operated vehicles guided by computer-positioning technology to mine oil and gas reserves more than 5,000 feet below the surface of the Gulf.

Currently, the world's deepest oil well is in Brazil's Campus Basin area, some 3,300 feet below the ocean's surface. In the Gulf, Shell Oil Company's $1.2 billion Auger Field is being perforated at a depth of 2,860 feet by operators 200 miles from the Louisiana shoreline.

By contrast, most oil drilling in the Gulf of Mexico and the North Sea takes place between 400 to 600 feet.

For more than a decade, the oil industry has toyed with the idea of drilling beneath salt sheets on the ocean floor. The incentive is clear: US petroleum reserves are dwindling. Last year, for the first time, more than half of the US crude oil needs were met by imports. But the oil-price tumble in the early 1980s, coupled with the high cost of research and development, simply made deep-water exploration a bad investment.

Until DeepStar.

Officially dubbed the Deep Water Staged Recovery System, the consortium includes 19 oil companies, all majors and some independents, as well as 44 service companies led by Texaco.

Share and share alike

All have agreed to share costs and resources, pooling their findings and sharing the results. Initiated in 1992, DeepStar involves such big players as Exxon Corporation, Shell, Mobil Corporation, and Marathon Oil Company, as well as comparatively smaller companies like Houston-based DeepTech International.

Already, Mr. Burton says, 3.5 billion barrels of oil and gas have been discovered in the Gulf's deep water, and the total could exceed the 13 billion barrels Alaska's Prudhoe Bay is projected to produce.

''This is the best way to afford developing this technology and then making sure the technology is there for everyone,'' says Tom Ames of Marathon Oil. ''Companies are participating and unabashedly sharing their information.''

Mr. Ames explains that domestic oil companies came to realize that unless they developed deep-water wells, they risked becoming overly dependent on foreign oil while allowing aggressive oil-producing countries such as Sweden, Britain, and France to out-distance them in the development of deep-water drilling technology.

Once commercialized, DeepStar's technology could stimulate the biggest boom to the domestic oil industry since the North Sea and Prudhoe Bay. Evidence of the growing interest in deep-water exploration came in May when oil companies paid $307 million to the Interior Department's Minerals Management Service office for drilling rights in far off sections of the Gulf.

And then only in the western half of the Gulf of Mexico. Although the oil industry has campaigned hard to lift a moratorium on drilling along the California coast, New England, and the Gulf of Mexico adjacent to Florida, a House Appropriations panel last week upheld the 13-year ban.

Many industry observers here expected the moratorium on other regions to continue, and that ''makes the Gulf the center of attention,'' Burton says.

Technological feats

To get at such remote oil reserves, DeepStar must build pipelines, pumps, and prospecting systems able to work in freezing waters under extreme pressure, while being controlled by faraway computers and operators using remote cameras to guide their equipment. In addition, fluid additives must be developed that will unclog paraffins in the pipelines caused by the cold deep-water temperatures and ferocious currents.

Already, some of these problems have been confronted at Shell's Auger Field. But going beyond that depth, to nearly 6,000 feet, will force the development of new technology, explains Harvey Fleischer, managing director of DeepTech International. ''The deeper it gets, the more complicated it gets,'' Mr. Fleischer says. ''This is cutting-edge type applications.''

To accelerate the project's development schedule, DeepStar's leaders are actively trying to bring in the country's national laboratories, principally Lawrence Livermore in California and the Los Alamos Laboratory in New Mexico, to share in the research and costs of the developments.

Ever since World Wars I and II, the country's tax-funded laboratories have dedicated much of their work to the needs of the military. ''They have done military research at cold-water depths that could very well apply to what we are doing,'' Fleischer adds.

Burton estimates DeepStar has only cost about $20 million so far; the big expenditures are still to come.

DeepStar has already floated a $550 million proposal for fiscal year 1997 that would be split between government and private sector.

But such partnerships may be a thing of the past. John Northington, chief of staff in the Department of Energy's (DOE) office of fossil energy, warns that the Republican-controlled Congress sees such outlays as ''corporate welfare.''

But Mr. Northington advocates a government-private sector partnership. ''There's a huge reserve base we have to tap for energy security reasons.'' Currently, the DOE and the national laboratories work together in a $50 million Natural Gas and Oil Technology Partnership focused on processing fuels and onshore drilling.

Louisiana congressmen are pushing legislation that would temporarily ease royalties paid to the federal government on deep-water wells.

Texaco's Burton, meanwhile, sees big gains for consumers and producers. Texaco holds reserves estimated at about 2 billion barrels. ''You've got 10 Texaco-sized companies out there in deep water,'' he says, his voice rising. ''This has huge potential.''

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