Big Oil finds more love in deepwater exploration fields By Reuters

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By Georgina McCartney

HOUSTON (Reuters) – As Big Oil returns to the industry’s annual showcase for offshore energy projects and equipment in Houston this week, deepwater discoveries off Guyana, Namibia and the U.S. Gulf Coast will be in the spotlight.

Offshore exploration had slowed after the US shale boom ushered in new and cheaper-to-draw oil reserves, and as previous offshore cost overruns had put deepwater projects on the back burner of the industry.

Newer deepwater projects have the attributes oil and gas companies are looking for: longer-term production, lower breakeven costs, high resource potential and lower carbon emissions, says Pablo Medina, head of new ventures at energy consultant Welligence.

“Deepwater is back in fashion,” Medina said.

Capital spending on all-new deepwater drilling is expected to reach a 12-year high next year, consultancy Rystad Energy predicts. Investments in brand new and existing deepwater fields could reach $130.7 billion by 2027, up 30% from 2023, the report said.

“The return of offshore and deepwater activities will be a key topic at OTC, and Namibia will be the topic of conversation,” said James West, senior managing director at financial firm Evercore, referring to the recent string of oil discoveries. off the West African coast.


With prices above $70 per barrel, energy producers can expect returns on their multi-billion dollar deepwater projects within six years, a relatively short period given the longer life of the resources compared to shale gas, explains Matt Hale, vice president of Supply Chain Research. at Rystad last month at the Rystad Energy Forum in Houston.

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Deepwater wells also offer lower carbon emissions intensity than shale and other tight oils, averaging 2 kg of carbon dioxide per barrel less than shale, Hale said. This appeals to investors who are looking for safer choices as environmental regulations become stricter.

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Enthusiasm for offshore has increased thanks to discoveries and technological breakthroughs. Namibian Mopane is expected to have as much as 10 billion barrels of oil in stock, Portuguese oil company Galp Energia said last month.

Chevron (NYSE:) and TotalEnergies (EPA:) have made a breakthrough in ultra-high pressure environments with their Anchor project in the Gulf of Mexico, the world’s first project to operate at a once-unfathomable pressure of 20,000 pounds per square inch (psi ). The Anchor platform is preparing to begin production off the coast of Louisiana and will produce up to 75,000 barrels of crude oil per day at its peak and operate for 30 years.

The Stabroek block offshore Guyana has demonstrated the potential for low-cost production that can rival the best deepwater fields elsewhere.

According to Rystad, more than half of recoverable resources are expected to be extracted in the next six years at a breakeven price of less than $30 per barrel. That compares with the breakeven point for about 80% of deepwater recoverable resources off the coast of Norway, Rystad estimates.

The renewed interest in deepwater has increased demand and results for offshore drilling contractors. Rates for some ships have exceeded $500,000 per day and contract lengths are lengthening as the supply of ships decreases.

“We will reach this crescendo over the next 18 months, with the market for deepwater platforms flattening out,” said Leslie Cook, upstream supply chain analyst at consultants Wood Mackenzie.

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