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'Bobbing' for oil on the high seas; time may be right for deep plunge

Better technology and higher prices are opening the door to potential new oil supplies -- untouched reserves far out at sea. So far, oil in deep ocean water of 1,000 feet or greater has been mostly shunned by energy companies. Two barriers stood in the way: It was too expensive to produce; and, in US waters, the federal government held back leases because of concern that the technology for deep-water drilling was not well developed.

Slowly these obstacles are being dismantled. Higher oil prices are improving the economics of deep-water production, and this is encouraging the development of new technology specifically designed to tap this unexploited resource.

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The US Geological Survey estimates there are between 12.5 billion and 38 billion barrels of undiscovered but recoverable oil offshore in US waters. By comparison, the nation has a total known reserve of about 28 billion barrels.

Deep-water oil exploration is too risky for many companies, which prefer hunting onshore and in shallow waters, where the geology is better known and the technology well developed.

But others reason that deep-water areas are the only ones apt to yield huge new finds, and are therefore worth the gamble. "We're looking for the best prospects we can find, and we believe many of them lie in deep-water regions because they are the least explored," said Owen Thomas, an executive with Phillips Petroleum Company.

The major hindrance to producing oil in deep waters has been the cost of the platform. "You're not at a technological limit, but you begin running way outside the economics of oil production" in deep water, says L. B. Curtis, manager of production engineering services for Conoco Inc.

Imagine a giant steel tower taller than the Empire State Building. That is what it takes to produce crude oil in waters deeper than 1,000 feet using a conventionally designed platform fixed to the ocean floor.

The world's tallest producing platform, operated by Shell Oil Company, sits in 1,025 feet of water in the Gulf of Mexico. Its base is a city block wide.

To avoid the cost of these mammoth structures, oil companies have been studying new platform designs. Alternative technology now is coming to the fore.

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Conoco recently unveiled a new tension-leg platform that does not require a huge and costly steel structure. It floats on the ocean and is tightly tethered to the sea floor with long tubular steel lines that permit the platform to sway horizontally in response to ocean movement but do not allow any up and down motions.

The platform will be used initially in the North Sea, but opens up the possibility of operating in deeper waters worldwide, Conoco says.

Last month Exxon Company U.S.A. announced it will put a new type of platform to work off the coast of Louisiana in water more than 1,000 feet deep. The platform is fixed to the ocean floor, but is supported by a tower no broader at its base than the platform itself. Stability is provided by guy lines that fan out symmetrically around the tower and attach to the sea bottom.

Exxon's guyed tower platform is designed to drill wells and produce oil at depths up to 2,500 feet.

Exxon also has developed and tested a submerged oil production system -- the wellhead sits on the bottom of the ocean -- that is aimed exclusively at very deep offshore fields in water of more than 2,500 feet. With this system the oil is either pumped directly to shore or to a nearby platform for processing.

Unmanned submerged systems have long held the promise of making deep-sea production more economical because their costs would not vary much with water depth. But some officials do not like the idea of an unmanned facility. "There are more chances for something to go wrong," ventures one oil company executive.

Environmental concerns have been a factor in the federal government's offshore leasing program. The Environmental Protection Agency, for example, has objected to the leasing of some deep offshore tracts in the past because of concern over the safety of deep-water technology.

However, the Department of Interior's newly proposed five-year leasing schedule includes deep-water tracts on the East and West Coasts of the United States and in the Gulf of Mexico next year. This is a recognition of advancements in deep-water production technology, acknowledges Richard Krahl of the US Geological Survey.

Also, the National Science Foundation is requesting funds from Congress to launch a scientific project of drilling in deep ocean waters around the United States to study the geology. Eight oil companies have agreed to help finance the project in hopes it will yield new information on potential offshore energy reserves. The cost of the project is $700 million.


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