Deepwater Drilling May Open New Oil Frontiers

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"The real success of the find is the improvement in seismic technology that allowed them to visualize what's happening far underground and recognize the structures [that may hold oil]," Jacobs said.

"I think you've seen great advancements in that area in the last five years."

The Jack 2 well, created using a rig called Cajun Express, faced a problem that may not affect other deepwater locations. Thin layers of salt, called salt canopies, overlay the oil-holding structures.

"Salt creates havoc for seismic imaging," Jacobs said. The salt alters how sound waves reflect off the rock layers.

Yet the drilling team was able to create accurate images of structures below the salt in three dimensions—a huge advance over technological predecessors using 2-D imaging.

"Geology is in 3-D," said Steve Hadden, senior vice president of exploration and production at Devon Energy in Oklahoma City.

"When you're looking at where in the Gulf of Mexico to drill an 80- to 100-million-dollar [U.S.] well that will ultimately be the size of a dinner plate [on the seafloor], having that 3-D look is very helpful."

No Easy Feat

New drilling ships and semi-submersible drilling rigs such as Cajun Express allow drillers to work at far greater depths than more conventional platforms that rest on the ocean floor.

The existing technology may be able to go even deeper than Jack 2. Cajun Express, created by the drilling company Transocean Inc., may be able to drill to 35,000 feet (10,670 meters).

But drilling to such depths provides many daunting engineering challenges.

Such equipment, for example, must be built to handle tremendous weight.

"The way the drilling process works is that you put sections of pipe together one at a time as you run [the pipe] through the water and down into the earth," Hadden said.

"You keep adding to the drill string until you reach the total depth of the well. So [in this case] you've got a 30,000-foot-long [9,144-meter-long] string of pipe hanging off a floating rig," he added.

"You can imagine the weight requirements, and you have to have the ability to lift it to the surface to change the drill bit."

Twenty thousand feet (6,096 meters) of the large diameter pipe that encases the drill hole tops the scales at over a million pounds (453,000 kilograms).

The enormous pressures found in deep wells are another major hazard.

Too much pressure can make it difficult to control the drill bit. Or the pressure could collapse the hole altogether.

Drillers must therefore use seismic readings while drilling to predict how high pressures will be at future depths in order to keep the hole viable.

And striking oil is only the first step. The find must then be brought to market.

This creates challenges for wells such as Jack 2, which is located far from the platform and pipeline infrastructure that already exists in the Gulf of Mexico.

To market oil from the new field, its owners are considering building a deepwater pipeline that would connect Jack 2 to existing infrastructure on the Gulf's Outer Continental Shelf.

The owners could also employ floating production, storage, and offloading vessels, or FPSOs.

FPSOs resemble giant oil tankers, but they are instead equipped with separation equipment that can remove water and gas from crude oil. The massive vessels can then hold the oil until shuttling tankers arrive to offload the product.

Tilting the Odds

Though the Jack 2 find is promising, its success is no slam-dunk.

Even conventional oil estimates are notoriously fickle. And unknown subsurface challenges may await to frustrate the area's production.

Such variables keep deepwater drilling costs high, but so does the hardware involved.

Equipment that can function at high pressure is expensive, as are surface facilities such as FPSOs, which can cost $500 million or more.

Costs for the Jack 2 test well alone approached $100 million.

"The upfront investments and the risks are not for the faint of heart," Hadden of Devon Energy warns. "It's a very big risk, but there can be a big reward."

High oil prices, however, may make developing expensive, unconventional oil sources—and the technology needed to exploit them—more feasible than in the past.

"What technology does for us is to help us to understand the geological risks a bit better, so that we're more comfortable taking the financial risk to find these structures," Hadden said.

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