U.S. shale producer Occidental Petroleum Corp. (NYSE:OXY) and Colombia's integrated energy company Ecopetrol S.A. (NYSE:EC) are planning to drill an offshore oil well off Colombia's waters in seas roughly 3,900 meters (close to 13,000 feet) deep before the year is out, Bloomberg has reported. Dubbed Komodo-1, the ultra-deepwater well will qualify as the deepest offshore oil well in the world, beating Angola's block 48 well, which holds the current world-record water depth of 3,628 m (11,903 ft).
"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.
According to Ecopetrol's offshore chief, Elsa Jaimes, the dizzying depths reached by offshore oil wells such as Komodo-1 are made possible by improvements in marine-seismic technology that allows exploration at greater depths and distances.
Offshore oil wells are measured in two ways: water depth and true vertical depth, or TVD. Water depth measures the distance between the rig floating on the surface and the spot on the seafloor where drilling will begin (like Komodo-1), while TVD measures the distance between the rig and the bottom of the well deep inside the Earth. In the oil and gas exploration and production (E&P) industry, deepwater is defined as water depth greater than 1,000 feet, while ultra-deepwater is defined as depths greater than 5,000 feet.
The deepest offshore well in terms of TVD is Qatar's petroleum well drilled in the Al Shaheen Oil Field in 2008, which reached 12,289 meters (40,318 feet). That's deeper than Russia's Kola Superdeep well that was drilled during the famous Space Race, mainly between the United States and former USSR. Kola reached a depth of 12,262 meters (40,230 feet), although it does not produce oil or natural gas.
According to industry data provider Enverus, more than 40 ultra-deepwater wells are expected to be drilled in the current year, making 2024 the busiest for ultra-deepwater drilling in a decade.
Deepwater Boom
More countries are increasingly exploring their offshore potential as some onshore reserves begin to peter out. Recently, Ecopetrol CEO Ricardo Roa revealed the company is considering buying gas assets in Colombia from Canadian operator Canacol Energy (OTCQX:CNNEF) due to ongoing concerns that Colombia will lose gas self-sufficiency in five years.
Recently, we reported that four largely unexplored sedimentary basins in India could hold more oil than the Permian Basin. India's lesser-known Category-II and III basins, namely Mahanadi, Andaman Sea, Bengal, and Kerala-Konkan, contain an estimated 22 million barrels of crude, more oil than the Permian Basin which has already produced 14 billion of its 34 billion barrels of recoverable oil reserves. Interestingly, India is looking to go deepwater and ultra-deepwater in these basins.
"ONGC and Oil India hold acreages in the Andaman waters under the Open Acreage Licensing Program (OALP) and have planned a few significant projects. However, India still awaits the entry of an international oil company with deepwater and ultra-deepwater exploration expertise to participate in current and upcoming OALP bidding rounds and explore these frontier regions," Rahul Chauhan, an upstream analyst at Commodity Insights, has said, emphasizing the potential of India's unexplored Oil & Gas sector.
Last year, the China National Petroleum Corporation (CNPC), the government-owned parent company of PetroChina, and Cnooc (OTCPK: CEOHF) kicked off ultra-deepwater exploratory drilling for oil and gas as the country looks to wean itself off of foreign oil. CNPC will drill a test borehole of up to 11,000 meters (36,089 feet), the country's deepest ever, in a bid to to test underground drilling techniques and also gain a better understanding of the Earth's internal structure.
The global energy sector is currently experiencing a deepwater drilling boom. According to Wood Mackenzie, deepwater oil and gas production is set to increase by 60% by 2030, to contribute 8% of overall upstream production. Deepwater production remains the fastest-growing upstream oil and gas segment, with production expected to hit 10.4 million boe/d in 2022 from just 300,000 barrels of oil equivalent per day (boe/d) in 1990. Wood Mackenzie has predicted that by the end of the decade, that figure will pass 17 million boe/d. Meanwhile, ultra-deepwater production is set to continue growing at breakneck speed to account for half of all deepwater production by 2030.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. More