Faced with increasingly challenging offshore drilling environments -- whether in the Arctic, the deep water of the Gulf of Mexico, or in Brazil’s pre-salt formations that lie under 2 kilometers of water and 5 more kilometers of sediment and salt deposits -- explorers are looking at the final frontier: production not from a surface platform, but from remotely-operated facilities bolted directly onto the ocean floor.
Subsea Drilling Brings the Process to the Ocean Floor
One report last year estimated that 2012 expenditures on subsea technology reached $9 billion, and some estimates are that that total will reach $139 billion by 2015.
Subsea production allows an escape from surface weather conditions, whether hurricanes or Arctic ice. Although Shell’s Arctic explorations were less than successful last year, facing both severe technical challenges and the ire of the U.S. Department of the Interior, they pressed on undaunted to sign a memorandum of understanding with Gazprom to explore the application of the technology in Russia’s Arctic shelf.
With a relentless hunger for oil from China, India, and the rest of the developing world, and both internal and technical pressures putting Saudi swing production in question, the price of oil is likely to remain high enough that the rewards of subsea production in extreme environments remain attractive. This will be especially true for firms that are developing the necessary specialized technical knowledge. Statoil and Shell, for example, are both developing subsea compressors to improve deep-water production.
The challenges are particularly notable because the fields in question are often so deep that they can’t be visited by humans, even in submersibles. All the construction and operation will be done robotically, by remote control. Patrick Kimball of FMC Technologies, another services company with subsea expertise, notes that his company hired a group of NASA engineers when the Space Shuttle program was mothballed.
Shell is preparing to build subsea infrastructure in its Stones field in the deepest waters of the Gulf of Mexico.
The field is estimated to have 2 billion barrels of oil equivalent in place, and is part of a play estimated to hold 15 billion barrels. There, the sea floor lies some 3.2 kilometers below the surface. The infrastructure now being built will be closer to traditional models, but the intention is for later subsea production infrastructure to mitigate dangers from hurricanes and surface accidents.
The real advantage here will lie with the technically proficient majors and service providers. Where Brazil’s state oil company, Petrobras, has sagely entered into partnerships with foreign companies, and benefited in efficiency and experience, Mexico’s Pemex continues to lumber along with inadequate infrastructure and inadequate technical and institutional capital. It remains to be seen whether Enrique Peña Nieto’s reforms of the Mexican energy sector, with plans expected later in the summer, will be able to keep up with the relentless technological drumroll that is reaching into ever more challenging environments to boost reserves.
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