The Next Prospects: Four Offshore Drilling Frontiers

The BP spill did nothing to halt the growth of oil demand or the drive for new resources. Here are four offshore frontiers where oil rigs are heading next.

This story is part of a special series that explores energy issues. For more, visit The Great Energy Challenge.

The one-year anniversary of the Deepwater Horizon explosion will be marked with recollections of the fight to stop the Gulf oil spill and reviews of the damage it caused on land and beneath the sea.

But the reality that propelled BP to plumb the depths of the Gulf of Mexico remains unchanged: The world is seeking more oil.

(Related: "Photos of Four Future Oil Drilling Sites.")

Oil will remain the dominant fuel in the global energy mix through 2035, even if current efforts at fuel efficiency and alternatives are included in the calculations, by the International Energy Agency's (IEA) projection. Worldwide oil demand is on track to climb 18 percent in the next 25 years, to 99 million barrels per day. The thirst for oil is growing, despite the inevitable decline of the world's older oil fields.

So the oil industry continues to seek new frontiers, and some of the most promising happen to be under the sea. More than half of all the oil that has been discovered since 2000 is in deepwater, says IEA. The energy consulting firm IHS CERA projects global deepwater capacity will more than double by 2030, to 11 million barrels per day.

The high pressure characteristic of these reservoirs—the reason BP's Macondo well was so hard to control—enhance their appeal. In a presentation last summer at the Aspen Ideas Festival, Joe Leimkuhler, offshore well delivery manager for Shell Upstream Americas, explained that the average U.S. well produces about 10 barrels of oil a day. The average offshore deepwater well, in contrast, produces thousands of barrels per day.

"The reason we're in deep water is that's where the oil is," says William Reilly, a former U.S. Environmental Protection Agency administrator, who co-chaired the panel appointed by President Obama to investigate the spill. The industry's rigs, he said, "are not only in deep water, they are in deeper and deeper water."

Oil companies are also is looking beneath the Arctic. While not considered deepwater, the region certainly holds its own set of challenges—as well as potentially 13 percent of the world's undiscovered oil.

Here are four offshore frontiers where oil rigs are heading next:


Brazil is a recent addition to the global roster of nations with huge oil prospects. South America's largest country is better known as a biofuel powerhouse, because of the sugarcane ethanol that fuels half of its transportation.

But Brazil's energy reserves picture changed dramatically with the 2007 discovery of the Tupi field some 200 miles (320 kilometers) south of Rio de Janeiro in the Atlantic Ocean. Brazil's national oil company Petrobras renamed the field "Lula" last year to honor former president Luiz Inácio Lula da Silva, who helped guide Brazil into a burgeoning economic boom, largely sparked by the discovery and development of oil.

According to estimates provided by energy consultants at IHS CERA, Brazil has nearly 48 billion barrels of oil in water depths of 2,000 feet (610 meters) or greater. Perhaps 6.5 billion of those barrels lie in the Lula field alone; the first oil was produced there only in the past year.

"It's relatively light (easy to refine) and it's huge," said Vikram Rao, executive director of the Research Triangle Energy Consortium (RTEC) in North Carolina. "But it's challenging. It's in some 6,000 feet (1,830 meters) of water and, more importantly, it's below a layer of salt."

Salt layers were created when ancient oceans evaporated, explained Rao, a former chief technology officer at the oil services company Halliburton. The thick salt layers for years obscured the oil hidden beneath until advances in sonar imaging opened up these new vistas for exploration. As it turns out, salt layers often accompany oil reserves, but they create challenging conditions, because the salt tends to rise up thousands of feet through overlying rock.

"What happens is that the rock that's adjacent to this salt, which was originally laid down flat, gets sort of pulled up like a rubber band that's attached to something," Rao said. As a result, the rock formation gets broken into pieces, and "when you go in there, you can often lose circulation," he said. That means drilling fluid, the heavy mud which helps control pressure, can be lost to the surrounding ground rather than recirculating through the well system, he explained. "Bad things can happen," Rao said.

"When drilling up against a salt dome you must treat it with respect," he said.

Petrobras leaders have vowed to proceed cautiously and gradually learn how their "pre-salt" oil fields behave to minimize risks both economic and environmental.

Margot Stiles, a marine scientist with the conservation organization Oceana, said research funded by Petrobras has helped to discover the deep-sea corals and other ecological treasures in Brazil's offshore drilling region. But she fears the company's operations could put that ocean environment in jeopardy.

"We've been working to limit offshore oil drilling because we just don't see that it's safe," she said. "After the Gulf oil spill people definitely have a greater appreciation for the limits of deep sea drilling technology, and the limits of what we can do to keep things safe."

West Africa

With the first drilling permits since the BP spill just issued in the Gulf of Mexico, and offshore oil activity beginning to gather steam in Brazil, the most active deepwater petroleum fields in the world right now are off Africa's west coast.

The two biggest players have been Angola and Nigeria, which between them have more than 20 billion barrels of proven deepwater reserves.

"It's young rock and it produces like crazy," RTEC's Rao said. "I once predicted that they would reach 100,000 barrels a day from a single well. The only thing holding it back is the size of the conduit."

Nigeria, which produces especially desirable "light, sweet" crude, was Africa's top oil producer, but slipped from that spot due to political unrest. Angola vies with Nigeria as Africa's top producer of crude oil, but it has its own political problems, particularly in the oil-rich Cabinda province.

Ghana, Liberia, and Sierra Leone are set to join the ranks of Africa's offshore producers.

The Jubilee well off the coast of Ghana, holding nearly 2 billion barrels of oil and 800 billion cubic feet of natural gas, began producing late last year. The Jubilee project is operated by London-based Tullow Oil. Dallas-based Kosmos Energy, the technical operator, and Houston’s Anadarko Petroleum, also have shares in the project, with Ghana's government retaining a 13.75 percent stake.

In late March, Anadarko announced another major find off the Ghana coast, in a well drilled to a total depth of 11,185 feet (3,400 meters) in water depths of approximately 2,900 feet (884 meters).

Farther west on the African coast is another potential drilling hot spot—the Sierra-Leone-Liberian basin. Anadarko plans to move a rig from the Gulf of Mexico to start drilling operations there later this year. Anadarko and Tullow, along with Spain's Repsol and Australia's Woodside Petroleum, said they had uncovered a promising reservoir under 5,900 feet (1,800 meters) of water with the Venus exploration well drilled in 2009.

Anadarko officials hope Jubilee to the east and Venus to the west are bookends for a 700-mile (1,100-kilometer) basin that is filled with similar geological formations containing hundreds of millions of barrels of deepwater oil.

Late last year, Liberia—which has never before produced crude oil—joined the deepwater game, approving Chevron's bid to acquire a 70 percent interest in three separate exploratory stretches covering some 3,700 square miles (9,600 square kilometers) of seafloor. Exploration is under way.

The Gulf of Mexico

The Gulf of Mexico, with more than 3,400 offshore production facilities, hardly seems like a new drilling frontier. But the experts believe there is much more oil out there—further from shore, in deeper water and in older geological formations. Estimates by IHS CERA suggest that the Gulf still holds nearly 13 billion barrels of recoverable deepwater oil.

"In the Gulf the hottest spot is something called the Lower Tertiary," RTEC's Rao explained. "It's vastly different from any other deepwater reservoir." BP's Macondo well, he explained, was in a geological formation called the Miocene, 25 million years old or less. The Lower Tertiary formation, farther south, is close to 60 million years old, he said.

(Related from National Geographic magazine: "The End of Cheap Oil.")

The Lower Tertiary lies about 200 miles (322 kilometers) off the Gulf Coast and extends from Alabama to Mexico. The deepest oil-producing structure in the world is floating here—Shell's Perdido production platform, which came online last year just three weeks before BP's Deepwater Horizon explosion closer to shore. The Perdido complex retrieves both oil and gas from reservoirs more than 8,000 feet (2,438 meters) below the water's surface.

Younger formations, like the Miocene, feature drilling-friendly permeable rock layers, Rao explained: "You breathe on this, and it flows." But the older oil in the Lower Tertiary may need to be fractured before it will flow, which isn't an easy process.

"Nobody had ever fractured in deepwater before," Rao said. "Fracturing at those depths, 24,000 or 28,000 feet (7,300 to 8,500 meters) from the surface proved to be an immense technical challenge," he explained, not least because of the hydraulic horsepower needed to operate at such distance.

BP, which reportedly is seeking U.S. permission to resume drilling in the Gulf, has a large stake in the Lower Tertiary. Beneath 4,000 feet (1,220 meters) of water and 6 miles (10 kilometers) of seafloor, BP's 2009 Tiber discovery is believed to hold 3 billion barrels of oil, In contrast, the ill-fated Macondo well seems modest; it held an estimated 50 million barrels.

The Arctic

Frigid temperatures, high seas, shrieking winds, darkness, and minimal visibility mark the offshore areas of the Arctic. But there is a lot of oil beneath it all. The United States Geological Survey estimates the Arctic holds 13 percent of the world's undiscovered oil—90 billion barrels recoverable with current technologies and practices. USGS also estimates the Arctic holds 30 percent of the world's undiscovered natural gas.

(Related: "Arctic Oil Rush Sparks Battle on Seafloor.")

"There's enough seismic [data] to know there's a great deal of hydrocarbons potential there," BP Chief Executive Bob Dudley said last month at IHS Ceraweek, a major energy conference in Houston.

But BP has run into trouble with an Arctic exploration deal it signed earlier this year with the Russian oil company OAO Rosneft. BP's partners in an older Russian joint venture have challenged the deal. Last week, at BP's first shareholder meeting since the Gulf spill, officials were grilled not only on the company's safety record but on how the Russian deal went awry. (The company expects to negotiate a settlement.)

(Related blog: "Vital Whale Feeding Ground Threatened by Russian Drilling Platform?")

On the U.S. side of the Arctic, there is no drilling currently under way. Shell* had originally planned exploratory drilling in the Chukchi and Beaufort Sea areas off Alaska's north coast this spring, having paid $2.1 billion to the U.S. government to obtain leasing rights. After Alaska Native and conservation groups successfully challenged the U.S. clean air permits that would have allowed the drilling and support vessels to operate in the area, Shell announced it would put off the effort to begin drilling this year.

The Arctic's offshore oil is not in deepwater, like the new finds in the Gulf of Mexico, Brazil and West Africa. Most Arctic oil is believed to lie less than 1,640 feet (500 meters) below the surface. But environmentalists worry about the difficulty of responding to a crisis in the harsh conditions at the top of the world.

"If you can't even fly in there because of the weather, how do you expect to be able to get there in response to an oil spill?" asked Eleanor Huffines, manager of the Pew Environment Group's U.S. Arctic Program. A Pew study last year pointed out that the nearest U.S. Coast Guard Air Station to the Beaufort and Chukchi seas is 950 miles (1,530 kilometers) away, and the nearest major port lies 1,300 nautical miles (2,400 kilometers) distant.

The Pew report also argues that little is known of how an oil spill would behave in a region of variable sea ice. Huffines noted that in February, when a container ship ran aground along Norway's southern coast and began to spill fuel oil into icy waters, booms and other conventional capture equipment proved inefficient in the ice.

Still, Norway is moving forward with new Arctic exploration. Last month, Norway's government said it would open up new parts of the Barents Sea to oil exploration. Norway's Statoil and others in the oil industry have been pressing for drilling off the Lofoten Islands in the Arctic, which Statoil estimates contains up to 2 billion barrels of oil, 20 percent of the remaining undiscovered reserves on the coast.

Amid strong environmental opposition, the government deferred an environmental study that could pave the way to development there until at least 2013, after Norway's next national elections. But the issue is sure to emerge again, as Norway struggles to replace its rapidly declining older oil fields in the North Sea.

In all, eight separate nations share claim to the Arctic's 11.6 million square miles (30 million square kilometers). To manage energy development, environmental protection, and other competing interests—from fishing to tourism—in this frontier, many say the future of the Arctic and its oil can be resolved only with international negotiations.

(Related blog: "Aspen Commission: Amid Climate Change, Arctic Cooperation Urgently Needed.")

(Related: "The Next Oil Spill: Five Needed Mandates to Head it Off.")

Clarification: An earlier version of this story incorrectly stated that Anadarko Petroleum ran the Jubilee project in Ghana. The project's majority owner and operator is Tullow Oil, while Anadarko has a minority stake.

*This story is produced as part of National Geographic’s Great Energy Challenge initiative, sponsored by Shell. National Geographic maintains autonomy over content.

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