Plumbing the Abyss for Oil : Companies Move to Deep Water in Gulf of Mexico to Tap New Fields That Hold Great Promise


In the science-fiction movie "The Abyss," oil roughnecks of the future operate an undersea drilling rig deep beneath the waves of the Gulf of Mexico--so deep that they encounter a race of water-borne aliens.

While no one expects real-life oil explorers to encounter similar creatures, offshore oil exploration and production have indeed moved from the shallows to the depths in recent years as the prospects closer to shore diminish and technology makes it easier to pull oil from miles beneath the sea.

Far out in the Gulf of Mexico, Shell Oil Co., Exxon Corp. and Conoco Inc. have each announced major oil discoveries this month in an area that industry executives believe holds the greatest promise outside Alaska for massive new U.S. oil finds.

"It's no secret in the industry that it is one of the truly outstanding provinces remaining for exploration, where there are still opportunities for large hydrocarbon accumulations," said Stephen M. Cassiani, vice president of exploration for Exxon's domestic subsidiary.

But there are drawbacks. Although company officials insist that the technology exists to produce oil commercially in water as deep as 7,000 feet, actual production platforms have been built only in water that is much shallower.

The main obstacle, however, is cost. The projects face hostile conditions, high pressures and distances of 100 miles or more from shore, requiring high-technology equipment, including remote-controlled robot submarines and sophisticated computers. As a result, billions of dollars must be invested before a drop of oil is produced for sale.

"These things cost a lot of money because they are so equipment capital intensive," said John Peschke, deputy director of exploration for the American Petroleum Institute, the oil industry's main trade group. Investment of "$400 million or $500 million is not an unusual number for just the hardware."

The situation is all the more frustrating as oil and natural gas prices remain relatively low.

"Clearly, we're talking a world-class field or an 'elephant' even to consider economic developments at these water depths"--that is, a field with 100 million barrels of oil or more, said Robert Howard, president of Shell Offshore Inc. in New Orleans.

Fortunately, said Peschke, "what looks good is the trend that some of these discoveries have proven to be sizable."

Led by Shell and British Petroleum, companies have already staked out leases in deepwater Gulf of Mexico, areas where the water depth exceeds 1,200 feet, more than twice the height of the Washington Monument. Large leaseholders include Conoco, Exxon, Texaco Inc. and Brazil's national oil company, Petrobras.

Exploration efforts in those leases are already showing promise:

* Two weeks ago, Shell announced a discovery that some analysts believe may be the largest U.S. find in 20 years: the Mars Prospect, which lies at a water depth of 3,100 feet, 130 miles southeast of New Orleans. The company said the field holds more than 220 million barrels of oil, but analysts put the estimate in that field and adjoining ones as high as 2 billion barrels. British Petroleum is Shell's partner in the field.

* On Tuesday, Exxon Corp. announced the discovery of a field with reserves between 100 million and 200 million barrels at a water depth of 4,350 feet about 50 miles off the coast of Louisiana. Conoco is a partner in the field.

* Also on Tuesday, Conoco announced its discovery of a field with between 80 million and 100 million barrels of crude oil below 2,900 feet of water.

All of the fields must be explored further before company officials give the green light for production, which would probably not start until late in the decade.

Estimates of the total undiscovered oil reserves in the deepwater Gulf run between 10 billion and 25 billion barrels of oil, comparable to the massive oil fields of the North Slope of Alaska. Oil companies have also pursued deepwater projects off the coast of Brazil and in the North Sea.

Deepwater oil production has been made possible by technological advances in the past decade, industry executives said.

A handful of rigs--floating drilling platforms--have already sunk exploratory wells in water depths as great as 7,500 feet. Using a satellite navigation system to fix a rig's position over a drill site on the ocean bed, such rigs have powerful motors to stabilize the platform to allow workers to lower a bit through the water, even in roiling seas.

Because oil may lie as much as 10,000 feet or more below the ocean bed, such an operation could involve millions of pounds of pipe, Peschke said.

"If you picture this rig floating on the top of the water with this long string, a mile and a half long, down the water, going into a 24-inch hole, you have some idea of the complexity of doing this," Shell's Howard said.

Once oil is discovered and a field is delineated, or defined, construction of a commercial production platform can begin.

The huge depths prevent the construction of conventional steel-tower fixed platforms such as those in use off the coast of California. Shell already operates the deepest fixed platform, Bullwinkle, in 1,353 feet of water in the Gulf of Mexico.

Instead, a variety of new platform designs have been devised. In one design, the drilling platform sits atop a narrow tower of flexible steel. The tower is supported by guy wires attached to the sea floor, much like a radio tower on land.

Exxon's Lena platform, installed in 1983 in 1,000 feet of water 110 miles southeast of New Orleans, is one such guyed tower and is the company's deepest production well.

But the preferred deepwater production system is called a tension leg well platform. The drilling platform actually floats on the water's surface and is attached by flexible vertical "tendons" of tubular steel to the sea floor. Controlling the ballast of the floating platform puts tension on the tendons, minimizing vertical motion while allowing horizontal shifting.

In building such platforms, undersea work may be done by remote-controlled robot submarines that take the place of divers, who would be unable to survive at the intense pressures of such depths.

In the Gulf of Mexico, Conoco's tension leg platform in the Jolliet field, operating in 1,760 feet of water, holds the depth record for a U.S. production platform. That record will be surpassed in 1993 when Shell completes construction of its Auger platform, which will operate in 2,900 feet of water.

Such platforms in theory could be used in water up to 3,400 feet deep, though Shell says it could be adapted for use as deep as 7,000 feet.

"When you're in water that deep . . . especially if it's a high-pressure reservoir, it's tricky," said Lysle Brinker, an analyst with the consulting firm of John S. Herold Inc. in Greenwich, Conn. "You have to design a production system that can withstand both the water and reservoir pressure that can be several thousand pounds per square inch, which is very dangerous."

Undersea production systems such as those shown in the movie "The Abyss," in which workers actually dwell on the ocean's floor, exist so far only in the imagination of screenwriters, Peschke said.

Construction of platforms takes years, and development costs for deepwater oil fields can run four to six times as high as costs to develop shallow offshore resources, industry officials said. Shell has spent $1.3 billion to develop the Auger field alone.

Despite the cost, oil companies are turning to the deepwater Gulf as other U.S. prospects are foreclosed. Most other offshore areas have fallen under drilling bans; the only other area with likely large oil deposits, the Arctic National Wildlife Refuge in Alaska, remains locked up and the subject of intense political debate.

"The (shallow areas) of the Gulf have been quite heavily explored by the industry in the last 40 years or so. Consequently, the opportunity to find larger structures containing larger reservoirs are to be found in the deeper water areas," said James Patterson, vice president for North American exploration and production at Conoco.

In 1985, 27% of the tracts in the Gulf were in water depths greater than 1,200 feet. In 1988, that percentage had increased to 44%, said Barney Congdon, a spokesman with the Minerals Management Service of the U.S. Department of Interior.

The government has provided incentives to promote such deepwater efforts. It requires lower minimum bids for deepwater leases, grants longer lease terms and assesses lower royalty payments on oil production.

Environmentalists who normally oppose any new offshore drilling moves are reserving opinion about new efforts in the deep Gulf. "Deep water is a new area, and we'll just have to see what's proposed and examine how they're going to go about it and watch the issues as they develop," said Andrew Palmer, political director of the American Oceans Campaign, a Washington environmental group.

Types of deepwater oil production platforms Fixed Platform Structure made of steel firmly attached to the ocean floor. The platform deck sits atop a rigid vertical structure called a jacket, constructed of tubular steel members, supported by piles driven into the seabed. Floating Production System These are essentially floating platforms held in place over the drilling site by wire ropes or chains. It is subject to considerable vertical motion. Guyed Tower The platform deck sits atop a narrow steel tower constructed to flex with ocean forces. In one version, called a guyed tower, it is held in place with guy wires leading to the seabed, much like a radio tower on land. Tension-Leg Platform The platform also floats, but is held in place above the drilling site by flexible vertical "tendons" of tubular steel, which are connected to the seabed and secured with piles. Unlike a floating production system, this type of platform has limited vertical motion.

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