HOUSTON—The oil and gas industry’s leaps forward in deep water over the years have come largely from overturning dogma, upending paradigms and pushing limits.

Speaking during “The Business of Deepwater: Past, Present and Future” panel at the International Meeting for Applied Geoscience & Energy (IMAGE) on Aug. 30, industry experts retraced the path oil and gas leaders have blazed in the hunt to produce hydrocarbons in increasing water depths, talked about current thinking and technologies, and considered deep water’s future potential opportunities.

Bill Langin, senior vice president for exploration west and deep water at Shell Plc, said deepwater projects generate shareholder value while providing some of the lowest carbon intensity barrels in the industry.

Shell has a long history of pushing into deepwater capability, he said, citing the company’s Cognac project in the Gulf of Mexico, installed in 1977. Located in 1,025 ft of water, Cognac was the world’s deepest production platform and the first one to produce from more than 1,000 ft water depth when it went onstream in 1978. Appomattox, which went online in 2019, is Shell’s largest offshore production facility, and Stones, which went online in 2016, is Shell’s deepest, located in 9,500 ft water depth.

“Water depth is just a number now. We just need a bit more riser,” he said.

Hess Corp. has also focused heavily on deepwater as part of its strategy.

Tim Chisholm, vice president of exploration, appraisal and development at Hess, said the company and its partners in deepwater Guyana and Suriname have drilled more than 100 wells and acquired 2.5 km of conventional core and conducted 16 drillstem tests in the deepwater Stabroek block.

“It keeps us busy, but we’re having a lot of fun doing it,” he said.

Hart Energy August 2022 - IMAGE Panel - Deepwater Oil and Gas Exploration Keeps Paying Off - Bill Langin Shell Headshot“Water depth is just a number now. We just need a bit more riser.”—Bill Langin, Shell Plc

Exxon Mobil Corp. operates the discoveries, while Hess and CNOOC are partners. In the last six years, the trio have located 11 Bbbl with finding costs of under a dollar per barrel, he said.

Deep water has taken Hess “from the outhouse to the penthouse,” he joked.

Part of the success Hess has had in the deep water comes from overcoming certain paradigms like “stratigraphic traps don’t work in deep water” that otherwise would have prevented investment in a project, he said.

Chisholm attributes Hess’ discovery track record to “bottoms up geology work and top down” geophysics work.

A standard approach

But finding oil or gas is only half the picture. Producing the hydrocarbons has to be profitable. He said that when the Stabroek partners decided to follow a “design one, build many” approach to the FPSOs that are being used to produce the discoveries in the block, it made “incredible” breakeven costs of $25/bbl to $35/bbl possible.

Cindy Yeilding, retired senior vice president for BP Americas, said cost-effectiveness and safety increased dramatically when the supermajor stopped bringing bespoke engineering into every aspect of a project.

“Every facility was serial model 001,” she said. “It contributed to a much longer planning and development time.”

Hart Energy August 2022 - IMAGE Panel - Deepwater Oil and Gas Exploration Keeps Paying Off - Tim Chisholm Hess HeadshotDeep water has taken Hess “from the outhouse to the penthouse.”—Tim Chisholm, Hess Corp.

In fact, she said, BP was only able to bring a couple of major projects on per year with that approach.

When BP pursued a more standardized process, it made it possible to bring seven or eight projects online per year, she said.

Problems and opportunities

Rich Sears, adjunct professor at Stanford University, said one of the bigger problems in deep water is gas.

“In deep water, gas is a problem. Gas is a problem in general in this business,” he said.

Sears said that when companies find gas associated with oil, it becomes “OK, I’ve got it, it’s inconvenient. What am I going to do with it?”

Companies often seek the least costly gas solution, he said, with the view that “it will cost me money, but it will allow me to make money off the oil.”

Chisholm echoed the sense that deepwater gas is problematic.

“We explore for oil, and we find gas, and we find a lot of it,” he said. “When we find a lot of gas, people get pretty creative about how to make money from it.”

Hart Energy August 2022 - IMAGE Panel - Deepwater Oil and Gas Exploration Keeps Paying Off - Cindy Yeilding BP Americas Headshot“People are looking at moving further offshore.”—Cindy Yeilding, BP Americas (retired)

Sears said associated gas could be a business opportunity for a company that wants to focus on gas, particularly because it figures into long-term energy supply.

But the deep water offers other opportunities, Yeilding said. The trick, she added, will be to continue overcoming dogmatic thinking in order to make progress.

Deep water offers opportunities for tidal energy, wave energy, ocean current, carbon storage, mineral resources, aquaculture and mariculture, and more, she said. And while there are currently floatels and cruises, cities could be the future of deep water, she said.

“People are looking at moving further offshore,” she said.