Are Drillers Showing More Interest in Deepwater Than Shale?

Nilanjan Banerjee

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Oil drillers will likely focus on the more economical deepwater wells than those in shale plays.

Shale fields have so far helped America make it to the top spot in the list of big oil producing nations. Advanced techniques like hydraulic fracturing and horizontal drilling primarily backed domestic drillers in revolutionizing crude production.

However, extracting oil from shale rocks through fracking is expensive and demands expertise. Recently, production from a few shale plays, especially the Permian Basin, has exceeded transportation capacities leading to a pipeline bottleneck problem. Thus, it is clearly time for oil drillers to focus on the more lucrative deepwater drilling.

Although huge oil reserves are trapped under the seabed, exploring under the water is quite risky and demands specialized knowledge along with advanced rigs and floaters. Hence, it is quite surprising that deepwater drilling has emerged as a better alternative amid recovering oil prices compared to domestic shale plays.

Why Deepwater Exploration Should Pick Up

It is time upstream energy players focus more on oil discoveries as the global reserve replacement ratio has been steadily falling over the past several years. Explorers are not replacing their reserves despite a continuous increase in global crude oil production.

Per the presentation by Transocean Ltd. RIG at Susquehanna Energy Conference, the percentage of oil production that the industry has been replacing with new discoverie....

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