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In the latest Bloomberg MLIV…
In order to survive into the future, big oil companies are forced to constantly search for large discoveries, driven by the necessity to replace the steady decline in production at existing fields. After so many decades of producing oil from easy to access fields, the only large discoveries left are found in remote or difficult to access formations.
Unfortunately part and parcel of developing these hard to reach deposits of oil is an increase in the risks involved, and it may come as a bit of a surprise to know, but despite the disaster at the Deepwater Horizon platform in 2010, BP is leading the push to develop the technology capable of operating in such environments.
Fuel Fix explained that some of these new oil formations “are so deep under the sea floor, and under such high pressure and temperature, that conventional equipment would melt or be crushed by the conditions.”
BP, regardless of its mistakes leading up to the 2010 spill at the Macondo field, is one the few companies in the world with the expertise and financial resources to discover and develop oil at such depths.
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BP holds rights to some of the largest reserves in the Gulf of Mexico in a new geological formation known as the Lower Tertiary, which is a layer of rock much older and deeper than the Miocene formations that supply most of the regions current oil production.
It was initially thought that the Lower Tertiary holds no oil and gas, but now that large discoveries have been made; Exxon, Chevron, and Shell are just some of the companies that have begun to explore the formation, and WoodMackenzie has said that within 15 years it could become the dominant source of oil in the Gulf of Mexico.
One of BP’s fields in the Gulf of Mexico is the Tiber field, which exists about 35,000 feet below the seabed (roughly 6.6 miles into the earth’s crust), making it around twice as deep as the il-fated Macondo well. The Tiber is also huge, holding an estimated 20 times as much oil as Macondo.
BP controls stakes in various such prospects around the world, but before they can begin producing they must first be accessed; a task that is currently beyond the capability of oil companies. First new equipment must be developed, and then regulators must be convinced that the drilling can be completed safely.
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BP has already had to pay $42.5 billion for its part in the Deepwater Horizon spill, and that figure continues to climb. Another disaster would likely prove the end of the company, but success here could restore their reputation and position in the industry.
Bob Dudley, the CEO of BP, admitted that the company had to think “very carefully before re-committing the company to the deep water following the 2010 accident.”
By. James Burgess of Oilprice.com
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…