Deepwater oil production
Ivan Sandrea's argument (OGJ, July 26, 2004, p. 18) that the deepwater oil discovery rate may have already peaked and that deepwater oil production may peak within 10 years, rests not upon a thorough analysis of deepwater discovery histories and field size distributions, but upon an assumption that the larger fields tend to be discovered early in the history of exploration of a given area.
That assumption is a powerful tool for examining the resource potential of many areas. However, experienced resource assessors know that the validity of this assumption rests on another underlying assumption, namely that all (or nearly all) of the area being examined is both politically and technologically accessible when exploration begins.
This underlying assumption clearly does not apply to deepwater areas. Deepwater exploration has in all areas been technologically constrained by water depth. The capability to drill in increasingly deep water (such as the current level of 3,000 m) has developed only gradually since deepwater exploration began with the discovery of MC311 in 1969.
This gradually receding technological limit has often been reinforced by political constraints as well.
These constraints have significantly affected deepwater discovery patterns by field size. Taking the deepwater Gulf of Mexico as an example, discovery patterns by water depth slice (<400 m, 400-800 m, 800-1,200 m, etc.) clearly conform to the hypothesis that the larger fields tend to be discovered first. But if we view the deepwater Gulf of Mexico as a whole, the hypothesis lacks empirical support.
At the end of 2002, there were 205 commerical oil and gas field discoveries in the deepwater lease blocks of the Gulf of Mexico. Of the 10 largest of these, 6 were discovered from 1998 to 2002, roughly 3 decades after deepwater exploration began. Only 1 was in the first 10% of the fields that have been discovered to date and only 3 were in the first 50 discoveries. Three of the 10 largest are in the most recent 5% of discoveries. The deepwater Gulf of Mexico thus provides an example of the largest fields being disproportionately concentrated in areas of deeper water depths that were not accessibile to the industry in the first decades of exploration.
Whether the other deepwater areas follow a similar pattern remains to be seen. For example, will exploration in Blocks 31-34 offshore Angola eventually prove to be as rewarding as exploration in the shallower Blocks 14-18?
The example of the Gulf of Mexico provides sufficient evidence for considerable skepticism rearding Mr. Sandrea's argument.
Richard Nehring
President, NRG Associates
Colorado Springs, Colo.
Energy policy
In a media interview before release of this administration's energy policy in May 2001, Vice-President Dick Cheney said, "this energy policy will look to private industry, not government mandates. We need to put in place government policies that encourage the private industry to do the job in developing energy for our country."
It is assumed that the above statement refers to the previous 10 years when our domestic oil production had declined by 2.5 million b/d because domestic drilling and development was at an all time low. This resulted in the largest decline of domestic reserves in the history of oil and gas. This statement also meant that the President's cabinet and staff, all members of this energy committee, would consult with professionals of the energy industry who use the best exploration, engineering, and operational expertise ever developed. This technology is currently being used by industry in the Gulf of Mexico, the North Sea, and other sensitive areas of the world.
All of the above should satisfy the public's right to know who this Energy Committee consulted with. However, it did not for those members of congress and environmentalists looking for a political issue. They started with news releases, TV appearances on news programs all directed at Vice-President Cheney.
The public should know that these obstructionists to an energy policy have created such a heavy dependency on foreign oil that we are not now in control of our energy destiny. Nervously, we wait for terrorist attacks on tankers, refineries, pipelines, and other installations to disrupt our supply, cause shortages, and increase costs to consumers.
Doyle T. Grogan
Denver
