From the window of a helicopter 1,500 feet above the Gulf of Mexico, oil platforms look like Tinkertoys in a swimming pool. Dozens dot the horizon stretching south from New Orleans and continuing out as the water deepens and turns a darker blue. Then, about 50 miles offshore, the platforms stop, and for the next hundred miles there's nothing. This is the deepwater Gulf of Mexico, where the ocean floor is 8,000 feet down and covered in a heavy layer of muck. Below that is an ancient salt bed several miles thick, and hidden under that, trapped tens of thousands of feet down, there's oil—billions and billions of barrels of it. And it's all in U.S. waters.
Chevron's Tahiti platform, about 190 miles offshore, first appears as a speck in open water. Even up close, its size is deceiving. A three-level structure sits above the surface, but its 555-foot hull is entirely submerged. At 714 feet tall and weighing more than 80 million pounds, Tahiti is the equivalent of a 70-story skyscraper floating in 4,000 feet of water. The first thing you notice when stepping onto its platform is a high-pitched hum: the sound of thousands of barrels of oil being pulled from the depths and pumped back to shore.
To Chevron, it's among the most beautiful sounds in the world, proof that a decade of investment in deepwater-drilling technology is beginning to pay off for big oil companies like itself, as well as BP, ExxonMobil, and Shell. After a string of hurricanes led to seven straight years of declining oil production in the Gulf of Mexico, a handful of new deepwater projects reversed the trend in 2009. This year deepwater oil is likely to power the first year-over-year increase in total U.S. domestic production since 1991. The turnaround comes as President Obama is making it a priority to wean America off foreign oil. That will require replacing more than half the oil we consume, or nearly 10 million barrels a day, even though domestic oil production has dropped 50 percent since 1970.
Oil producers like Chevron say offshore drilling represents our best shot at energy independence. Today some two thirds of U.S. production comes from land-based reserves, mostly in Texas and Alaska, but those sources aren't producing the way they once did. The U.S. government estimates that the Gulf of Mexico holds somewhere around 70 billion barrels of oil, 40 billion of which remain undiscovered in the deep water. Combined with the entire Outer Continental Shelf, there's thought to be more than 85 billion barrels of undiscovered crude off the coast of the U.S., more than a decade's worth of oil at our current pace. By 2020, 40 percent of U.S. oil could come from offshore, according to analysts at IHS Cambridge Energy Research Associates.
With easily accessible oil in decline around the globe, oil majors are vying for reserves hardly worth a second look a few years ago: plumbing the frigid waters off Greenland, where icebergs have to be towed away from rigs; sifting the viscous tar sands of Alberta, Canada; venturing into the rainforests of Venezuela's Orinoco Basin; and probing more than 4,000 feet below the ocean off the shores of Ghana. Last year Brazil's state-owned Petrobras drew the first oil from its 9.5 billion to 15 billion barrels of proven new reserves buried below 4.5 miles of sea, sand, rock, and salt, and spread over an area larger than Britain, 185 miles off the coast of Brazil.
In the U.S., however, offshore drilling remains politically fraught. Environmentalists argue that we can achieve energy independence by cutting demand and ramping up renewables. They add that the thousands of gallons of mud deepwater drilling unearths contain toxic metals—mercury, lead, and cadmium—that may end up in the seafood supply. The water that comes up from wells contains a toxic mix of benzene, arsenic, lead, and various radioactive pollutants, according to studies by the Natural Resources Defense Council. Storms only make things worse: hurricanes Rita and Katrina led to 125 spills from platforms and pipelines on the Outer Continental Shelf, releasing nearly 685,000 gallons of petroleum products into the ocean.
But since 9/11, the imperative to reduce our reliance on Middle Eastern oil appears to be trumping environmental concerns. Republicans have long been in favor of more drilling, and now Blue Dog Democrats like Virginia Sens. Mark Warner and Jim Webb are lobbying Interior Secretary Ken Salazar to make offshore drilling a priority. In a December 2009 Rasmussen poll, 68 percent of Americans supported offshore drilling in domestic waters.
So while the world debates capping carbon emissions, oil companies are busy plowing their billion-dollar profits back into deep water. The Gulf of Mexico is the front line of this effort, largely because it's one of the few places on earth where private companies are still allowed to operate. "In most places in the world, there's a growing consensus that oil assets should be run by the state," says Jeff Rubin, a former chief economist at CIBC World Markets. "The number of places where the private sector has the right to be is getting smaller every day."
Chevron's Tahiti began pumping its first oil in May 2009, making it the deepest-producing offshore oil platform in the world. It is already yielding 125,000 barrels a day and delivered more than $1 billion in revenue in its first five months of operation. Chevron and its partners spent $2.7 billion getting Tahiti to this point; this year the company will add up to six more wells.
The brainpower behind all this is back in Houston at Chevron's North American Exploration headquarters in the former Enron building. Geologist Barney Issen sits on the fifth floor in what's called the Viz room, where he manipulates 3-D computer models of the Tahiti field. The proprietary model represents millions of dollars and years of work for Chevron. It's the company's road map of the deepwater gulf; without it, Chevron would be groping in the dark down there.
It takes months to drill a deepwater well, and it can cost more than $100 million. Temperatures exceed 450 degrees at that depth; the 20,000 pounds of pressure per square inch is enough to crush a dump truck. Even with million-dollar, hard-as-diamond bits, drilling four and five miles through mud, salt, and several layers of rock is painstaking work. In shallower waters, companies could drill 100 or 200 feet an hour, but in the deep water, they're lucky to do that much in a day. Like getting a hit in baseball, in deepwater drilling anything more than a 30 percent success rate is considered excellent.
On Tahiti, the oil comes roaring up from six different wells at a scorching 160 degrees. After it's cooled by seawater, it gets separated from natural gas, pressurized, treated, sold to refineries, and piped back to shore. Twice a day, production-operations manager Tim Bracey pulls a sample from a test line. "That's what we're all out here for," he says, holding up a test tube. "Get this out of the ground, sell it, and make money for the company."
Environmentalists see a slightly more complicated picture. Even when everything goes perfectly, extracting oil from this far underground takes a toll on the environment. "You're going to have spills," says Felicia Marcus, Western director of the Natural Resources Defense Council. "Marine life and coastal communities will be impacted, [so] we have to start asking ourselves if it's worth it."
For Chevron, the answer is obviously yes: next year a handful of new deepwater projects are scheduled to come online. Chevron and its competitors are even working on "ultra-deepwater" projects to extract oil from more than 7,000 feet of water and some 40,000 feet of earth. Someday there may be greener and easier ways to power America. But for now, the conservative cry of "drill, baby, drill" will echo even farther offshore.