Deep-Water Drilling Rises From The Depths

With Trump set to revive offshore exploration, Big Oil is developing cheaper ways to drill

- Kevin Crowley

On a hot, sunny May afternoon, flying fish leap out of the Gulf of Mexico’s brilliant blue waters near the steel legs of a Chevron Corp. oil platform, pursued by deep-water predators. “Is that a shark chasing them?” asks barge supervisor Jamie Gobert, peering over a rail. “Think it’s yellowfin tuna or maybe dolphin fish,” says Emile Boudreaux, his colleague.

Typically in the region, seeing so many deepwater creatures converging on a single spot would be unusual. But these denizens of the Gulf have a road map of sorts to Chevron’s huge Jack/St. Malo platform, a floating steel structure the size of three football fields about 200 miles off the Louisiana coast. The fish are following giant underwater pipelines that carry crude from three oil fields about 15 miles away in different directions from the Jack/St. Malo, like tentacles of an octopus. Unlike old-style platforms that suck oil from a field directly below, this weblike arrangement lets the Jack/St. Malo pump more than 3,000 gallons of crude a minute from the trio of fields.

The three-for-one hub is part of a wave of innovation by oil majors including Chevron, BP Plc, and Royal Dutch Shell Plc that’s allowing deep-water production in the Gulf to bounce back from disasters both environmental (BP’s Deepwater Horizon spill in 2010) and financial (the oil-price crash of 2014).

While U.S. shale production has been dominating markets, a quiet revolution has been taking place offshore. The combination of new technology and smarter design will end much of the overspending that’s made large troves of subsea oil barely profitable to produce, industry executives say. New projects are targeting costs of about $35 to $40 a barrel, which would compete with the lowest-cost shale assets. Cutting costs lets operators tap oil reserves that were previously uneconomic to exploit.