The romance of deepwater exploration is undeniable. During the past decade, monster finds have been made in deepwater's Golden Triangle of the Gulf of Mexico, offshore Brazil and offshore West Africa. And, the quest is just beginning. Deepwater drilling, usually defined as occurring in water depths greater than 1,000 feet, is booming throughout the globe. "We expect that deepwater provinces should deliver between 8- and 9 million barrels of oil per day by 2010," says Hesketh Streeter, vice president of energy consulting firm Wood MacKenzie. "That will be about 9% of total supply." About 60 billion barrels of oil have been found in deepwater fields to date, and some 8- to 10 billion barrels have already been produced. "The yet-to-find potential could be as high as another 114 billion barrels of oil, and 68 billion barrels of oil equivalent (BOE) of gas. There's still a long way to go." Deep water is no longer just a game for the majors. Independents are flocking to the hunt, drawn by these huge potentials and robust success rates. "The average global success rate in deep water is about one in three, but success rates in deepwater Egypt are 82%; in Angola, 62%; Nigeria, 56%; and in the Gulf of Mexico, around 35%," says Streeter. Nonetheless, the challenges are many. Well costs in deepwater environments are mind-numbingly high and cycle times can seem interminable. "Finding a huge accumulation in very deep waters is a wonderful achievement, but an even greater achievement is producing oil from those finds," he says. For more on this, see the May issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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