Three years ago, the BP oil spill in the Gulf of Mexico led the news for 85 days and virtually shut down drilling in the Gulf.
But memories are short, and oil has value…
Gulf drilling is back — and will account for 19% of U.S. oil production this year.
Next year, due to improvements in technology, Gulf oil production will expand dramatically. The pent-up demand for offshore oil exploration will be unleashed and increase Gulf production to 1.55 million barrels a day.
By 2017, production is expected to break the 2009 GOM peak of 1.8 million barrels a day.
Denizens of the Deep
The push for deepwater offshore drilling is driven by the fact that while fracking is booming, it is expensive. And wells run out relatively quickly.
In the high seas, companies feel the siren call of the mother lode…
Bloomberg has reported there are 12 to 15 new fields slated for production by 2020 that contain 78.86 billion barrels of oil equivalent. The upfront cost of production is astronomical, with lease rates alone for deepwater drillships pushing a million dollars a day.
That said, big oil companies with deep pockets, like ExxonMobil (NYSE: XOM), can develop these fields and still be economical, even if oil drops to $30 a barrel.
The economics are proven out by demand for GOM drilling leases. Leases for Gulf acreage this year sold for a total of $1.3 billion, drawing 468 bids for two million acres.
Further evidence of a new Gulf boom is to be found in rig counts: Rigs looking for new discoveries have increased from 20% of the total rig count to 40%.
WATS the Future
Part of the reason for the resurgence of Gulf oil is politics, but a large factor has to do with new technology.
Wide azimuth towed streamer acquisition (WATS) has been a game-changer.
WATS is defined by the Schlumberger Oilfield Glossary as:
A marine seismic data acquisition method that uses one or more vessels to tow source arrays and streamers to record seismic signals, along with one or more source-only vessels sailing parallel to, but at some specified distance from, the recording vessel(s). The source-only vessels provide offset sources that generate reflections from a wide range of azimuths; these reflections are received by streamers towed by the recording vessel(s).
WATS is the reason big oil companies like BP (NYSE: BP) can bet billions on deepwater drilling.
When you are playing with that kind of money, you need to be sure that you have an accurate picture of where the oil is and how it can be recovered. WATS provides that clear picture.
It sounds simple, but when you are talking about billions of deepwater and underground seismic images that move in real time, you get a vast need for computing power.
This is why BP recently opened one of the largest supercomputing facilities on earth.
A Supercomputer’s Supercomputer
On Monday, BP announced it has opened a new facility to house the world’s largest supercomputer for commercial research.
According to the press release:
The Center for High-Performance Computing, located at BP’s US headquarters in Houston, will serve as a worldwide hub for processing and managing huge amounts of geophysical data from across BP’s portfolio and be a key tool in helping scientists to “see” more clearly what lies beneath the earth’s surface.
Better imaging capability will also help the company more safely and efficiently appraise new finds and manage complex reservoirs once production starts. In addition, the center opens up new possibilities for research into other important aspects of BP’s business activities, from oil refining to enhanced oil recovery.
For example, it will help facilitate BP’s industry-leading development of “digital rocks,” a proprietary technology for calculating petrophysical rock properties and modeling fluid flow directly from high-resolution 3D images — at a scale equivalent to 1/50th of the thickness of a human hair.
The new facility was built with Intel (NASDAQ: INTC) and HP (NYSE: HPQ) and has a computing power of 2.2 petaflops.
A petaflop equals one thousand trillion calculations per second. It also claims 1,000 terabytes of memory and 23.5 petabytes of disk space — the equivalent of 40,000 average laptop computers.
BP scientists can now have the computing power to complete an imaging project in one day that would have taken four years using computing technology from just 10 years ago.
Deepwater drilling is the future for big oil.
It is the last frontier for oil exploration.
Companies that make the drillships, the seismic systems, and the underwater robots will benefit.
In fact, robotics and computing power are reaching a tipping point. These advances will not only change our lives in terms of providing energy, but they are accelerating the very pace of change.
Those with the vision to get in early on the right companies will make a fortune.
This is why I have created a new service to make you money by detailing these very companies for you…
Keep an eye on your inbox for the opportunity to join this new service, called Technology and Opportunity.
For profits,
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
