I N NOVATION S I N DE E PWATE R
OTC panel: Deepwater’s low-cost,
low-emission profile to keep it
competitive in coming decades
Companies exploring carbon credits, CCS
technologies and supply chain decarbonization
to fully leverage deepwater E&P’s advantages
BY STEPHEN WHITFIELD, ASSOCIATE EDITOR
E&P companies face a difficult balancing
act. They have to address the world’s grow-
ing push for renewables and environmen-
tal sustainability, which impact invest-
ment trends and business strategies, at the
same time that factors like the COVID-19
pandemic, the Russia-Ukraine war and
global inflation push them to explore for
and produce more hydrocarbons.

According to a panel of analysts and
industry experts at the 2023 Offshore
Technology Conference, this approach of
increasing E&P activity while incorporat-
ing low-carbon solutions will define oper-
ator activity in the near- and long-term
future. Deepwater oil and gas will play a
key role in enabling that journey.

“Deepwater production is going to grow
more quickly than any other resource,”
said Julie Wilson, Research Director, Global
Exploration at Wood Mackenzie. “All of the
hype you’ve heard about tight oil and LNG,
ignore all of that. Deepwater is where we’re
going to see the most growth.”
Wood Mackenzie estimates that, by
2050, the world’s total discovered and pro-
spective oil resources will be more than
double its base-case energy transition
outlook oil demand forecast, and natu-
ral gas resources will be close to double
the expected demand. However, not all
resources will be cost effective and/or
emissions efficient, so the industry will
have to become much more selective.

“Advantaged” barrels, which Wood
Mackenzie defines as resources with
breakeven price below $30/Brent and
an emissions intensity of less than 20
kgCO 2 e/BOE, will be prioritized in the
coming years. However, only 28% of the
resources in commercial undeveloped
fields currently meet those criteria. This
means operators will have to invest in
solutions to help turn disadvantaged
resources into advantaged resources, Ms
Wilson said.

“Total resource is not the issue,” she
explained. “Many of the resources we have
in our database have never been developed
because they are too expensive, too dirty or
too far from markets – whatever the reason,
they’re disadvantaged. There’s still a great
deal of demand required, and exploration of
new resources is going to be required.”
Going forward, E&P operators will like-
ly produce some of the disadvantaged
resources in order to meet demand, but
they will be looking to offset some of the
cost and emissions by maximizing pro-
duction from more advantaged develop-
ments like deepwater.

One example is the Guyana-Suriname
Basin, which already has more than 50
wells on the Stabroek Block even though
exploration in Guyana only began in 2019.

Joint venture partners ExxonMobil and
Hess made nine discoveries on the block
last year and, just in April, announced
sanction of their fifth project there – Uaru .

Upon startup in 2026, the project is expect-
ed to produce 250,000 bbl/day of oil .

Clare Gardner, Exploration Director –
South America at Hess, pointed out that
the average breakeven prices of the first
four sanctioned projects in the area –
Liza Phase 1, Liza Phase 2, Payara and
Yellowtail – ranged between $29-$35/bbl.

“If you look back to the beginning of
2019 with Guyana, we were getting zero
production. Now we’re getting 75,000 bar-
rels a day in Q1 2023. The pace and scale
at which these projects are coming online
A panel of industry representatives at the 2023 OTC discussed the role they expect deepwater to play in the near- and long-
term future . Pictured (from left) are Maiza Goulart, Petrobras; Brandon Finley, TechnipFMC; Sarah Hill, BP; Romain Chambault,
Baker Hughes; Clare Gardner, Hess; and Julie Wilson, Wood Mackenzie.

38 J U LY/AU G U ST 2023 • D R I L L I N G C O N T R AC T O R