Shell deep water Gulf well could cut imports in half

Houston Chronicle:

Two hundred miles off the coast of Texas, ribbons of pipe are reaching for oil and natural gas deeper below the ocean’s surface than ever before. 

These pipes, which run nearly two miles deep, are connected to a floating Shell platform that is so remote they named it Perdido, which means “lost” in Spanish. What attracted Shell to this location is a geologic formation found throughout the Gulf of Mexico that may contain enough oil to satisfy U.S. demand for two years. 

While Perdido is isolated, it isn’t alone. Across the Gulf, energy companies are probing dozens of new deepwater fields thanks to high oil prices and technological advances that finally make it possible to tap them. 

The newfound oil will not do much to lower global oil prices. But together with increased production from onshore U.S. fields and slowing domestic demand for gasoline, it could help reduce U.S. oil imports by more than half over the next decade. 

Eighteen months ago, such a flurry of activity in the Gulf seemed unlikely. The Obama administration halted drilling and stopped issuing new permits after the explosion of a BP well killed 11 workers and caused the largest oil spill in U.S. history. 

But the drilling moratorium was eventually lifted and the Obama administration issued the first new drilling permit in March. Now the Gulf is humming again and oil executives describe it as the world’s best place to drill. 

“In the short term and the medium term, it’s clearly the Gulf of Mexico,” says Matthais Bichsel, a Royal Dutch Shell PLC board member who is in charge of all of the company’s new projects and technology. 

By early 2012 there will be more rigs in the Gulf designed to drill in its “deep water” — defined as 2,000 feet or deeper — than before the spill. 

In November, Perdido began pumping oil from a field called Tobago; the well begins 9,627 feet below the surface of the Gulf. No other well on the globe produces oil in deeper water and that’s about as deep as the Gulf gets. For drillers, that means the entire Gulf is now within reach. 

“We are at the point where … depth is not the primary issue anymore,” says Marvin Odum, the head of Royal Dutch Shell’s drilling unit in the Americas. “I do not worry that there is something in the Gulf that we cannot develop … if we can find it.” 

From a distance, Perdido looks like an erector set perched on an aluminum can. This can, or “spar,” is a 500-foot-tall steel cylinder that sits mostly underwater, serving as a base for the equipment and living quarters above. It is stuffed with iron ore to lower its center of gravity, keeping the whole operation from bobbing in the water like a cork. The spar is tethered to the sea floor 8,000 feet below with ropes and chains. 

Oil and natural gas are pumped to Perdido from nearby wells drilled by an onboard rig and from faraway wells drilled by satellite rigs. Water and other impurities are then removed from the oil and gas, which gets sent hundreds of miles through an undersea pipeline to terminals and refineries along the Gulf coast 

.Perdido, which pumps the equivalent of 60,000 barrels of oil and natural gas a day, will eventually yield 100,000 barrels per day from 35 wells in a 30-mile radius, according to Shell. It will likely produce oil for decades — in all, as much as 360 million barrels of oil and 750 billion cubic feet of natural gas, according to Wood Mackenzie.

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There is more.

Imagine how much more oil the US could produce if the Democrats would just get out of the way.  A few more wells line these and the US could become a net exporter again.   With Obama strangling domestic production it will probably take a new President and Congress for the US to reach its energy production potential.