Offshore oil and gas is most frequently drilled from fixed-platform, shallow-water complexes, but new technologies are making it possible for operators to move farther offshore in waters up to 3,000 meters deep. These areas are where the largest reserves are located. Production costs, although high, are in line with those of other unconventional hydrocarbon resources.
A Long History of Technological Development
OffshoreRefers to sea-based oil exploration and production operations, as in "offshore license" or "offshore drilling". drilling began in earnest in the 1950s when shallow-water wells were set up in the Gulf of Mexico off the coast of Texas. After the 1973 oil crisis, European countries began to develop oil and gas fields in the North Sea in order to reduce their dependency on Middle Eastern oil. The first technological breakthrough came with the invention of floating platforms capable of functioning in harsh environments.
The development of more sophisticated exploration and drillingThe process of boring a hole into the ground using special equipment... technologies in the 1990s subsequently paved the way for deep offshore production in water depths of more than 500 meters. Since then, it has become common to produce oil at water depths of 1,500 meters, and some operators are even tapping reserves at more than 3,000 meters depths.
In the early 2010s, offshore production, whether shallow or deep, accounted for 30% of global oil production and 27% of global gas production. Of the more than 17,000 platforms in use, half were fixed structures anchored to the seabed. Because most of the shallow areas are already under development, the focus today has shifted to the deep offshore, which contains the most promising finds.
In 2013, deep offshore oilDescribes crude oil produced offshore, either in shallow water (depths up to 700 meters) using standard methods, or in deep water... and gas accounted for 6% of world production. By 2035, these sources are expected to account for nearly 11% of global conventional oil and gas production, or close to 9 million barrels of oil equivalent a day. Offshore production accounts for an estimated 20% of the world's oil reserves and 30% of global gas reserves1.
17,000: The approximate number of offshore oil and gas platforms.
Vast Sedimentary Basins
Like onshoreRefers to land-based oil exploration and production operations, as in "onshore seismic data acquisition" or "onshore drilling". oil and gas reserves, offshore resources are found in sedimentary basins, at the edge of continents. These formations are often located at the mouth of a major river or an alluvial depositAn accumulation of natural resources, such as oil, natural gas, coal, uranium, metal ore or another commodity... . Propelled forward by successive "avalanches", the layers of sediment fan out over hundreds of kilometers beyond the continental margin, where they are then deposited in the deep ocean plain.
Deep-sea sedimentary basins cover an estimated 55 million square kilometers of the ocean floor, or 100 times the surface area of France. Since only 3% of these basins have been explored, it is likely that there will be major finds in the future2.
Sometimes the basins are covered by a huge mound of salt, called a salt dome, that interferes with the seismic waves used to image the subsurface. Thanks to advanced 3D imaging systems however, it is possible to map the formations more effectively.
Exploration projects are currently underway off the coast of Brazil, in the Gulf of Mexico, in the northeast Atlantic (Scotland), in the Gulf of Guinea and off southern Africa. The Middle East and the Mediterranean have considerable gas potential.
Offshore production currently accounts for 30% of global oil production and 27% of global gas production.
Costly but Competitive
The cost of offshore oil and gas production differs widely depending on the type of field, the location and production conditions. However, a comparison of the breakeven prices of various sources shows that offshore production is in line with unconventional or hard-to-access oil. In 2014:
- The breakeven price of a barrelUnit of volume measurement for crude oil that is equivalent to approximately 159 liters (0.159 cubic meters)... of continental shelf (i.e. in relatively shallow waters) was 41 dollars. Although significantly higher than a barrel of onshore Middle East (27 dollars), it was less than the breakeven price of a barrel of oil shipped over a long distance by gas pipelinePipeline used to transport gas over a long distance, either on land or on the seabed. (51 dollars).
- The breakeven price of a barrel of oil extracted from deep waters (52 dollars) and ultra-deep waters (56 dollars) was less than that of a barrel of North American shale (65 dollars) and oil sandsUnconventional oil deposits containing extremely viscous... oil (70 dollars).
- Production costs were the highest in the Arctic region (75 dollars).
Breakeven prices can change according to market developments and are responsible for wide price swings. But they illustrate the fact that offshore oil is capable of withstanding the fall in oil prices.