WORLD’S DEEPEST OIL WELL UNFOLDS

The oil industry is pushing the boundaries of offshore exploration with plans to drill a record-setting deepwater well in Colombia within the next few months. 

Occidental Petroleum Corp. and Ecopetrol SA are preparing to explore the depths of Colombia’s Caribbean waters in search of natural gas and oil. They plan to drill the Komodo-1 well before the end of the year, reaching depths of approximately 3,900 meters (nearly 13,000 feet). 

This depth is equivalent to about 10 Empire State Buildings stacked on top of each other and would surpass the current water-depth record held in Angola.

Oil explorers globally are returning to deep-sea drilling as production growth from North American shale fields slows, prompting companies to expand their operations elsewhere. SLB, the world's largest oilfield-services provider, anticipates commitments exceeding $100 billion for offshore projects in 2024-2025.

“Offshore and deepwater are currently undergoing a remarkable renaissance, driven by the imperatives of energy security, regionalization, and a maturing and disciplined North American shale supply,” James West, an analyst at Evercore ISI, wrote in a note to investors. 

Offshore drillers measure wells using two methods: water depth and true vertical depth (TVD). Water depth measures the distance from the rig floating on the surface to the sea floor where drilling begins. TVD, however, measures the distance from the rig to the bottom of the well deep within the Earth. 

The attempt to break the water-depth record with Komodo-1 is partly enabled by advances in marine-seismic technology, which allow exploration at greater depths and distances, according to Ecopetrol’s offshore chief, Elsa Jaimes, in an interview.

Colombia is exploring its huge offshore potential as some onshore reserves begin to peter out, she said. “You have the technology and you also have this huge potential that strengthens our portfolio,” Jaimes added.

According to industry data provider Enverus, more than 40 wells are expected to be drilled this year in seas at least 1,500 meters deep, making 2024 the busiest year for ultra-deepwater drilling in a decade.

“The fact that we can drill to those depths is what’s driving” the push, said Dai Jones, director of global intelligence at Enverus. Increasing energy demand also is providing a push, he noted.

In the previous decade, deep-sea drillers rapidly expanded their rig fleets, only to face the onshore shale revolution and consecutive oil-market collapses in 2014 and 2016. As a result, some of the world's largest offshore drillers had to mothball floating rigs that cost $500 million or more each to build. 

According to SLB, deepwater wells are projected to supply up to one-fourth of global oil output by the end of this decade, compared to about 20% today.

“We are seeing customers going deeper and deeper to more challenging environments,” Wallace Pescarini, president of SLB’s Offshore Atlantic business, said in a phone interview. “It’s natural that the easiest to tap is behind us. So now the new frontiers are a little deeper and a little bit higher pressure.”

According to Enverus’ Jones, while the total cost of offshore exploration is significantly higher than shale drilling, the potential payouts are substantial, longer-lasting, and more insulated from shifting political and regulatory regimes. However, compared to shale, the risk of drilling a "dry hole"—industry jargon for failing to find oil—is exponentially higher in the ocean.

“You’re taking a gamble,” he said. “And you can spend a lot of money taking that gamble.”

Source: rigzone.com

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