Technology drives Gulf energy industry

Just as the invention of the steam engine powered the start of the Industrial Revolution, innovative oil and gas technology has ushered in a powerful deepwater revolution in the Gulf of Mexico in recent years. Advanced technology has provided the tools to find oil and gas in places never before possible.

In fact, once considered the Dead Sea when it comes to oil and gas exploration and production, the Gulf of Mexico is now proving to be a bountiful energy province with major new discoveries thanks to modern technology. Since the beginning of time, the Gulf has produced 90 percent of domestic U.S. crude oil from all Outer Continental Shelf territories, and currently 80 percent of Gulf oil comes from the deepwater. All of this deepwater drilling activity is good news for Americans as our economy and livelihoods will rely on fossil fuels for decades to come. The industry’s constant goal is to find and produce additional energy resources in a safe, economic and sustainable way, and technology makes that possible.

From the very beginning, offshore production has been a story of innovative solutions to nature’s challenges and economic demands. In October 1947, the first commercial offshore well was drilled by a “mobile” rig in 14 feet of water in the Gulf of Mexico’s Ship Shoal area in southeastern Louisiana. It was the first oil discovery “out of sight of land” and ushered in a new frontier for energy companies and American workers.

In the early days, offshore production in the shallow water involved steel or concrete structures sitting directly on the seabed. The invention of “directional drilling” — drilling from the same central location to a wider area — enabled greater production from a single platform. And the quest to reach oil and gas resources in deeper waters beyond the footprint of a fixed platform led to the development of subsea systems — floating production facilities — that made today’s deepwater industry possible, with production in depths of 1,000 feet or more. The advent of ultra-deepwater projects in water depths greater than 5,000 feet are the new reality with state-of-the-art deepwater production facilities.

Similarly, until recently, exploration was restricted by the thick salt layers beneath the Gulf of Mexico seabed, which absorb the sound waves sent out during seismic surveys. Advanced exploration, seismic and modeling developments have allowed the industry to “see” below the salt and have resulted in extraordinary finds. This capability has revealed previously hid-den resources in seemingly mature basins and a number of new frontier plays. And the progress continues.

Five deepwater Gulf of Mexico projects began in the last three months of 2014 and 13 deepwater fields are expected to start-up in the next two years — eight in 2015 and five in 2016. As a result of these new projects coming on line and existing Gulf projects now producing, the U.S. Energy Information Administration projects Gulf of Mexico production to reach 1.52 million bpd in 2015 and 1.61 million bpd in 2016, or about 16 percent and 17 percent of total U.S. crude oil production in those two years, respectively.

Even better news for the years ahead is the industry is not stopping at the deepwater mark. Energy producers are now moving even further to ultra-deepwater projects with production facilities in water depths over 5,000 feet. Shell’s Gulf of Mexico ultra-deepwater Stones project, for example, is now in progress at a record water depth of about 9,500 feet. According to Shell, production from Stones’ first phase of development is anticipated in 2016.

It’s clear for nearly 70 years, dramatic technological advancements have allowed the offshore industry to overcome the scientific and economic challenges of offshore production and successfully identify and develop previously untouchable deepwater oil and gas reserves. Technology used today has allowed us to achieve production levels that may have been unheard of just 10 years ago, and the need for affordable energy will continue to drive even further innovation in the Gulf. At LMOGA, we support the industry’s vision and leadership in developing new technology that makes the impossible possible and will fuel America for decades to come.