The future of deepwater drilling
Oil companies are drilling further out to sea and deeper than ever before to reach the last remaining pockets of oil. Deepwater drilling used to be extremely expensive, but high oil prices in 2007 and 2008 contributed to a renewed interest in offshore reserves. US President Barack Obama has said the oil spill in the Gulf of Mexico will have a lasting impact on environmental policy - but what will it mean for the future of deepwater oil drilling?
According to the US Minerals Management Service, there were 31 rigs drilling in deep water in the Gulf of Mexico in 2008 - compared with only three in 1992. Exploration has also continued in other parts of the world. Earlier this year, drilling began off the Falkland Islands where the oil was previously considered too deep to be viable.
But most deepwater oil has been found in the so-called golden triangle - made up of the Gulf of Mexico, Brazil and West Africa. The Tupi and Jupiter fields off the Brazilian coast are two of the largest deepwater reserves discovered in recent years and large reserves are also being exploited off the coast of Nigeria and Angola. As technology has advanced, so deeper reserves of oil have become more accessible. Oil companies are now capable of drilling what they are calling "ultra-deepwater" wells - like the Deepwater Horizon - more than 500m below the surface.
Oil consumption around the world has fallen slightly in the past two years - largely due to the global economic crisis. Consumption was down by 1.7% from 2008 to 2009, according to the annual BP Statistical Review of Energy. As a result, prodution also dropped slightly last year, by 2m barrels per day or 2.6%. The US Energy Information Administration expects demand for energy - including liquid oil production - to rise again in 2010 - as the global economy begins to recover.
Exxonmobil - which claims to be the largest company involved in deepwater drilling - says exploration has begun in only half the known deepwater fields and it expects deepwater oil to continue to provide a significant proportion of its total oil production for years to come. Before the Gulf of Mexico disaster, the US was predicting a rosy future for deepwater drilling in the Gulf. But President Obama has said it is important to draw the right lessons from the Gulf of Mexico disaster and that will include looking at switching away from oil to other sources of fuel.