Worldwide, the deepwater drilling market has been valued at more than US $40 billion between 2003 and 2007 including exploration, appraisal and development activity. The implication is for a gigantic and continuing global appetite for exploring deep oceans for hydrocarbons.

Between 1998 and 2002 the total figure for deepwater drilling was $19.24 billion. Between 2003 and 2007 that figure is set to double to $40.20 billion according to industry analysts Douglas Westwood. Now the industry has conquered what is perhaps the psychologically important 10,000-ft
(3,050-m) water depth barrier with ChevronTexaco's Toledo exploration well, there's no knowing how much further deep drilling can go.

Douglas Westwood's World Offshore Drilling Report for 2003-2007 points to a continuing upswing in deepwater activity throughout the world. Africa, Latin America and North America, specifically the Gulf of Mexico, continue to take the largest cuts of deepwater expenditure.

Gulf of Mexico

Deepwater drilling entered a new era when ChevronTexaco spudded Toledo in Alaminos Canyon block 951 in the western US Gulf of Mexico, just breaking the 10,000-ft (3,050-m) water depth barrier for the first time. It was actually drilled in a water depth of 10,011 ft. (3,052 m).

Unocal set the previous Gulf of Mexico deep drilling record in October 2001 with the Transocean drillship Discoverer Spirit in 9,727 ft (2,966 m) of water also in Alaminos Canyon block 903. Toledo is 10 miles (16 km) east of Unocal's 2002 Trident discovery in the Perdido Fan Belt. Transocean's Discoverer Deep Seas drillship spudded the Toledo well last November. Drilling operations "went smoothly" and completed ahead of schedule on Jan. 6, 2004, a ChevronTexaco spokeswoman said. "However, details are confidential, pending further review and analysis."

She said Toledo was drilled to a depth of 22,695 ft (6,919 m). "We also utilized best practices and leveraged our technology to safely complete drilling operations and eliminated the need for strings of planned casing. This resulted in a saving of 2 weeks of rig time and contributed to us completing drilling operations ahead of the projected schedule," she said. The company declined to comment on pre-drill reserves estimates and costs. And after completion, there was no statement of a successful outcome to cap the record, suggesting Toledo was a dry hole.

On board the drillship was a Sonardyne dual redundant subsea acoustic positioning equipment - a Long and Ultra-Short Baseline system - fitted December 2002. It provides reference points for the vessel's dynamic positioning system, independently of water depth. A similar Sonardyne system is due to be used later 2004 for riser-less drilling in 22,967-ft (7,000-m) water off Japan to investigate the earth's crust, in a project managed by the Japan Marine Science and Technology Center.

Elsewhere in the Gulf of Mexico, Unocal has made major discoveries - St. Malo and Puma.

St. Malo was located in Walker Ridge block 678 in the Gulf of Mexico October of last year and found 450 ft (137 m) of net oil pay over a 1,400 ft (427 m) gross hydrocarbon column. Mike Bell, Unocal's vice president for deepwater USA said, "The potential volumes at St. Malo give us the confidence to call this discovery a significant milestone in our Gulf of Mexico deepwater program."

St. Malo was spudded June 6, 2003 in 6,900 ft (2,103 m) of water with the Discoverer Spirit which drilled to a total depth of 29,066 ft (8,861 m) in 100 days - costing an estimated $62 million.

Earlier this year Unocal discovered Puma with the Discoverer Spirit in a water depth of 4,130 ft (1,259 m) in Green Canyon block 823, drilling to a depth of 19,034 ft (5,803 m) on a BP-operated well, hitting 500 ft (152 m) of net Miocene oil pay after spudding Aug. 14, 2003. Puma is just west of Mad Dog in Green Canyon 826. After Puma the Discoverer Spirit was released for ExxonMobil's Hawke appraisal in Mississippi Canyon 508.

During 2004, Unocal will target more deep prospects, Myrtle Beach in the southeast Green Canyon area; Tobago in Aliminos Canyon 859 to test a structure between the 2002 Trident and Great White oil finds. Also to be drilled is a St. Malo appraisal, in Walker Ridge, 678; La Jolla south of St. Malo, and Sardinia, in Keathley Canyon 681.

Mexico

Offshore Mexico, state operator Pemex was reported to be talking to 10 international operators about exploring its deepwater acreage in the Gulf region known as the doughnut hole covering 6,563 sq miles (17,000 sq km). Pemex head Raul Munoz said his company lacked deep exploration expertise.

Cuba

Offshore Cuba, a Norwegian owned rig, the Eirik Raude owned by Ocean Rig was deployed for a Repsol-YPF operated drilling program in Cuba's Exclusive Economic Zone in the Gulf of Mexico. The unit was due to drill a single deepwater well, in 5,412-ft (1,650-m) water depth with a $195,000 dayrate.

Six out of 60 blocks in the Cuban sector of the Gulf are eventually due to be explored - 4,130 sq miles (10,702 sq km) and half of Cuba's deep Gulf acreage.

Earlier the Eirik Raude completed a previous deepwater well for EnCana offshore Nova Scotia on the Weymouth prospect operating in a water depth of 3,904 ft (1,800 m).

Another Ocean Rig unit, the Leiv Eiriksson was operating off Angola.

West Africa

By February 2004, Ocean Rig's Leiv Eiriksson drillship had completed five of six optional wells for ExxonMobil and spudded a sixth on the Calulu prospect in Angola's deepwater block 33 operating in a water depth of 6,690 ft (2,040 m). Calulu was due to complete this month. Another Norwegian-owned rig, Smedvig's West Navigator has been instrumental in tapping West African hydrocarbons. The West Navigator worked for Australia's Woodside Petroleum, appraising the Chinguetti field area off Mauritania. Equipped with a dual drilling derrick, the drillship spudded a Tiof West well in a water depth of 4,431 ft (1,351 m) and drilled to a total depth of 9,813 ft (2,992 m), taking just 5.6 days to drill 5,382 ft (1,641 m) - a record Smedvig claimed.

Smedvig also has a letter of intent from Woodside worth $80 million for an 11-well production-drilling program with the West Navigator off Mauritania commencing June 2004 for 380 days.

Also off West Africa Woodside agreed an option to farm into the 887 sq mile (2,300 sq km) Ntem deepwater license area in the Douala Rio Muni Basin offshore Cameroon under a deal with Fusion Oil and Gas. Woodside is obligated to part-pay costs of a 2002 3-D seismic program and drill up to two exploration wells on the permit if the option is exercised.

But deep success is not restricted to West Africa and the Gulf. In the Mediterranean Sea offshore Egypt, the Stena Tay semisubmersible, operating on the 16,000 sq. mile (41,500 sq km) North East Mediterranean (NEMED) concession area where water depths range between 2,624 ft to 7,872 ft (800 m to 2,400 m) drilled the KG45-1 well 94 miles (150 km) off Alexandria and struck undisclosed amounts of oil and gas after drilling to 10,374 ft (3,613 m).

The well was operated by Shell with Petronas and Egyptian Natural Gas Holding Co. After two more wells, Shell said KG45-1 and LA52-1 wells, "Successfully tested a variety of hydrocarbon plays in the southwest of the concession area." Shell's Global exploration director Matthias Biscel
said the three-well program demonstrated the Egyptian ultradeep region was a rich hydrocarbon province. One well also set a water depth drilling record offshore Egypt, at over 7,872 ft (2,400 m), using surface a blow out preventer (BOP) - a technique previously used by Total and Unocal with Cameron equipment offshore Indonesia.

Egypt's State Information Service confirmed the KG45-1 discovery, saying it had, "Significantly extended the known distribution of hydrocarbons into the far outboard Nile Delta, 62.5 miles (100 km) northwest of previous discoveries."

More deep Mediterranean drilling was in prospect offshore Morocco after Malaysia's Petronas signed in January with the Office National de Recherches et d'Explorations Pétrolières (ONAREP), Morocco's national oil company, for the 5,404 sq. mile (14,000 sq km) deepwater Rabat-Sale Haute Mer area with depths ranging from 3,280 ft to 13,120 ft (1,000 m to 4,000 m). Petronas is obligated to shoot 6,560 ft (2,000 km) of 2-D seismic and drill one exploration well within 3 years.

Brazil

Apart from recording an earlier deepwater production record with the 1-RJS-436A well on the Roncador field in 6,077 ft (1,853 m), water depth, Brazil's Petrobras is reaching further with its ProCap 3000 deepwater technology program. Latest work is targeting development of ultradeepwater drilling, with slender wells, allowing third generation rigs with less deckload to operate in deepwater through the elimination of casing strings.

In the Campos Basin, Petrobras has changed conventional well design by eliminating the 20-in. casing string. This was largely possible through extensive knowledge of the pore pressure gradient in Campos Basin wells. "It was the knowledge of this parameter that allowed the concept of the slender well," Petrobras said. "Furthermore it was possible to go deeper with the 133/8-in. casing with safety and without the need to run the BOP stack. This depth is the same or in some cases deeper than the 133/8-in. casing shoe of the conventional wells."

Asia /Indonesia

In Asia Unocal and Murphy are among those making deep finds. In January Unocal farmed into the Donggala production sharing contract (PSC) area offshore East Kalimantan Indonesia, with water ranging from 6,000 ft to 8,000 ft (1,829 m to 2,439 m), adjacent to Unocal's operated Rapak PSC where it discovered Ranggas and Bangka.

During 2003, Unocal had planned participation in 16 exploration wells offshore Indonesia including seven field wildcats with partners. Part of that program was to test deeper horizons and in May 2003 the plan paid off with the Gehem 1 discovery drilled in the Ganal PSC in the Kutei Basin off East Kalimantan which encountered 617 ft (118 m) of net gas and condensate pay and 18 ft (5 m) of net oil pay after drilling to a total vertical depth of 15,241 ft (4,645 m) in a water depth of 5,981 ft (1,823 m). Gehem is only 3.5 miles (5.6 km) south of Ranggas, and followed the earlier Gada and Gula discoveries.
North Sea

Offshore Norway, Shell and Statoil will continue a deepwater exploration agreement until 2009 after they originally agreed on a co-operation plan in 2001 covering the Møre and Vøring basins in the Haltenbanken areas. But the new agreement includes the north eastern Vøring Basin - the location of the 6405/7-1 Norwegian Sea Ellida oil discovery late 2003. Also, the Barents Sea off northern Norway will see four exploration wells towards the end of 2004 according to the Norwegian oil industry association Olieindustriens Landsforening. Two deepwater wells are also planned on the UKCS in the West of Shetlands area by Total and ChevronTexaco commencing April with the Jack Bates and West Navigator rigs.

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