Energy companies are venturing deeper into the Gulf of Mexico as they explore for and produce new sources of crude and natural gas, a new government report shows.
The number of production projects operating in depths greater than 1,000 feet rose 8 percent last year to 141, according to the report released Monday by the Interior Department's Minerals Management Service, which oversees U.S. offshore activity.
The MMS pegs any project at 1,000 feet (304 meters) or greater as "deepwater," but increasingly companies are moving into 5,000-foot (1,520-meter) depths or more. Those are classified as "ultra-deepwater."
For example, of the 15 deepwater discoveries made by exploratory drilling last year, the MMS said five were in waters deeper than 5,000 feet. Murphy Oil Corp. led the way with a find at 9,975 feet (3,040 meters).
One of the newer production projects is BP PLC's Thunder Horse platform, which floats in about 6,000 feet (1,828 meters) of water. Thunder Horse, the Gulf's most prolific producer, was pumping roughly 260,000 barrels of oil a day as of March 20, the MMS said.
The agency also noted that at the end of 2008, 57 percent of Gulf oil and gas leases were in depths greater than 1,000 feet, up from 54 percent a year ago.
Marvin Odum, the president of Shell Oil Co., a leader in deepwater operations, said the charge to deeper water is linked partly to the shrinking number of areas to explore for new sources of fossil fuels. It's also a testament to technology that provides better images of what lies beneath the earth's surface, he said.
"We see what looks like could be attractive reservoirs out there," Odum said.
Last year, Shell Oil said it set a water-depth record by drilling and completing an oil well in 9,356 feet (2,851 meters) of water in the Gulf, part of its Perdido Development project about 200 miles (320 kilometers) south of Houston.
Production at Perdido is scheduled to begin early next year and Shell has said the project, which dates to a lease sale in 1996, will be capable of producing 130,000 barrels of oil equivalent a day.
For now, Anadarko Petroleum Corp. operates the world's deepest producing platform in the Gulf of Mexico. Independence Hub, which began producing natural gas in 2007, is moored in about 8,000 feet (2,438 meters) of water about 120 miles (193 kilometers) southeast of Biloxi, Mississippi.
Deepwater drilling in the Gulf dates to 1979, but development really didn't take off until the 1990s.
In a separate report released Monday, the MMS predicted oil production in the Gulf will increase substantially in the next several years, in part from the many new discoveries. But the agency said natural gas production is likely to decline beyond 2009 unless companies are able to develop new, undiscovered resources in the region.
The Gulf of Mexico accounts for about 25 percent of domestic oil production and 15 percent of natural gas output, according to the MMS.