((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto)) by Georgina McCartney
As major oil companies return to Houston this week for the annual Offshore Energy Projects and Equipment Fair, deepwater discoveries off Guyana, Namibia and the U.S. Gulf Coast will be in the spotlight. the ramp.
Offshore exploration slowed after the U.S. shale boom opened the way to new sources of oil that were cheaper to exploit, and cost overruns from earlier offshore projects relegated deepwater projects in the background of the industry.
New deepwater projects have the characteristics oil and gas companies are looking for: longer-term production, lower operating costs, significant resource potential and lower carbon emissions, said Pablo Medina, head of new businesses at Welligence, an energy consultant.
“Deep water is coming back into fashion,” Mr. Medina said.
Capital spending on new deepwater drilling is expected to reach its highest level in 12 years next year, consultancy Rystad Energy predicts. Investments in new and existing deepwater fields could reach $130.7 billion in 2027, a 30% jump from 2023.
“The return of offshore and deepwater operations will be a big topic at OTC, and Namibia will be the talk of the show,” said James West, senior managing director at financial firm Evercore, referring to the recent round of oil discoveries off the west coast of Africa.
FASTER Amortization Periods
With crude oil prices above $70 per barrel, energy producers can expect to turn their multibillion-dollar deepwater projects profitable in six years, a relatively short period given the longer lifespan of wells compared to shale, explained Matt Hale, vice president of supply chain research at Rystad, at the Rystad Energy Forum in Houston last month.
Deepwater resources also have lower carbon emissions intensity than shale and other tight oils, averaging 2kg less carbon dioxide per barrel than shale, Hale said. This attracts investors looking for safer bets as environmental regulations tighten.
Enthusiasm for offshore has soared with technological discoveries and breakthroughs. Portuguese oil company Galp Energia GALP.LS said last month that Namibia’s Mopane field is expected to hold up to 10 billion barrels of oil.
Chevron and TotalEnergies made a breakthrough into ultra-high-pressure environments with their Anchor project in the Gulf of Mexico, the first in the world to operate at once-unfathomable pressures of 20,000 pounds per square inch (psi).
The Anchor platform is set to begin production offshore Louisiana and, at its peak, will produce up to 75,000 barrels per day (bpd) of crude and operate for 30 years.
The Stabroek block, offshore Guyana, has demonstrated the potential for low-cost production that rivals the best deepwater fields.
Over the next six years, more than half of its recoverable resources are expected to be pumped at a breakeven price below $30 per barrel, according to Rystad. This figure is comparable to the break-even point of around 80% of recoverable resources in deep waters off Norway, Rystad estimates.
Renewed interest in deep water has boosted demand and bottom lines for offshore drilling companies. Rates for some vessels have exceeded $500,000 per day and contract lengths are lengthening as supply increases. of ships decreases.
“We’re reaching that crescendo over the next 18 months or so, when the deepwater drilling rig market () stabilizes,” said Leslie Cook, upstream supply chain analyst at consultants Wood Mackenzie .