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A Race to the Bottom

The term “deepwater” generally refers to wells drilled in more than 1,000 feet of water, and Chevron, like all the big oil companies, has kept a weather eye on deepwater prospects for years. An exploration well in the leased Green Canyon region, for instance, was drilled in March 2002, and it went down 28,411 feet, through a two-mile-thick layer of salt and into a 400-foot-deep pay zone of sand and oil.

In November 2002, Chevron began developing the oil field, starting with a series of appraisal wells drilled at its estimated north and south ends to offer a clearer idea of what was there. The results were better than Chevron expected. The pay zone looked to be 1,000 feet thick and 7.5 square miles in size. If all goes well, Tahiti ought to be about a 500-million-barrel field, a huge find in today’s market.

Lured by such prospects, oil companies have been pressing into ever deeper water, with Chevron, Kerr-McGee, and BP leading the field in the Gulf of Mexico. Abroad, major prospects include the waters off West Africa, the South China Sea, and possibly even the Mediterranean. From 1997 to 2003, the number of deepwater projects in the Gulf of Mexico grew from 17 to 86. The number of ultradeep-water projects in the gulf, those in more than 5,000 feet of water, has more than doubled in the last two years alone. In the past 10 years, as inshore wells have slowed down, deepwater oil production has risen more than 840 percent.

When Chevron began developing Tahiti, it ordered a platform. Like everything in the deepwater field, platforms are moving toward new heights of size, complexity, and cost. They can’t simply rest on columns driven into the seabed, so they have to float; but otherwise, their design varies. Some platforms, like BP’s Thunder Horse – currently the largest, it is bigger than the largest aircraft carriers and took 15 million man-hours to build – float on pontoons. Tahiti’s platform will be designed as a spar, which is often likened to a Coke can. The spar is delivered horizontally to the site and then tipped into place as its bottom fills with saltwater ballast.

At a time when oil prices have been as high as $75 a barrel, such costly equipment more than pays. It follows that Chevron and Transocean have already worked out a long-term lease on a yet larger ship, Discoverer Clear Leader, which is to be delivered in 2009 and will cost Transocean some $650 million to build. Similar in many ways to Deep Seas, it will have a larger drive unit at the top of the derrick, allowing it to drill in up to 12,000 feet of water, boring as far as 40,000 feet below sea level. It’s expected to cost Chevron roughly $750,000 a day to lease and operate.

Twelve thousand feet of water is bordering on the practical limit of exploration, at least in the Gulf of Mexico. It may not be as far as technology can take deepwater drilling, but it is probably as deep as Chevron will need to go to get oil. “Get any deeper, and you’re leaving the sedimentary deposits of organic matter that make oil,” says Paul Siegele, who oversees the company’s offshore exploration and development in the gulf. “The bottom of the deep ocean is just solid basalt.” Not that the oil companies haven’t started to survey the deepest ocean floors anyway, just in case.

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