Following years of subdued activity in the aftermath of the 2010 BP Deepwater Horizon disaster and the subsequent moratorium, drilling activity in the Gulf of Mexico is finally picking up. Companies including Chevron, Royal Dutch Shell, and Anadarko are all bringing new, high-impact projects online this year.
Most activity is currently concentrated in the Gulf's Miocene geological trend, where companies have been drilling deepwater wells for decades. But the biggest opportunities in the region may lie in what's known as the Lower Tertiary, or Paleocene -- a relatively uncharted geological trend that could hold twice as much oil as North Dakota's prolific Bakken shale.
Until relatively recently, energy companies had assumed the Lower Tertiary, which is characterized by much older rocks, ultra-deepwater depths, and high bottom-hole pressures, to hold very little quantities of oil. But thanks to a hunch by Texaco geologist Robert Ryan nearly two decades ago, the 25 million year old formation has been catapulted into the big leagues.
Back in 1996, Texaco and its partners, including Royal Dutch Shell, Amoco Corp., and Mobil Corp., which would later merge with Exxon to become ExxonMobil, drilled a well in the Lower Tertiary that broke the world record for the deepest deepwater well ever drilled. What the companies found would set off an exploration rush that is only to set to accelerate in the years ahead.
Experts estimate the Lower Tertiary could contain a whopping 15 billion barrels of recoverable oil, worth $1.5 trillion at current prices. By comparison, the Bakken and Three Forks formations that span parts of Montana, North Dakota, and South Dakota are estimated to hold 7.4 billion barrels of technically recoverable oil, according to calculations by the U.S. Geological Survey last year.
Indeed, the Lower Tertiary is projected to become the single largest source of oil in the Gulf of Mexico over the next 15 years, according to consultancy Wood Mackenzie.
Though its development faces challenges including extreme pressures and temperatures and staggeringly high development costs, the sheer size of the trend's resource potential is simply too great to pass up.With regard to the statement "the Bakken and Three Forks formations that span parts of Montana, North Dakota, and South Dakota are estimated to hold 7.4 billion barrels of technically recoverable oil" --- newbies may want to look at CLR's numbers which can be found at their most recent presentation. This is not new; CLR has been saying this for the last two or three years.