New drilling technology to unlock billions of barrels of oil

A breakthrough in oil drilling technology may soon unlock up to 5 billion barrels of crude oil that were previously out of reach, according to industry analysts. This development centers around the ability to safely access ultra-high-pressure oil fields, which has the potential to significantly boost production.

Chevron announced on Monday that it successfully extracted oil from a field operating at pressures of 20,000 pounds per square inch—a pressure level one-third higher than any previous well. This milestone was achieved through its $5.7 billion Anchor project, which utilizes advanced equipment designed by companies such as NOV and Dril-Quip, and drillships provided by Transocean.

The second-largest oil company in the U.S. began production from the initial well at the Anchor site on Sunday. A second well, already drilled, is expected to commence production shortly, according to Bruce Niemeyer, Chevron’s head of oil exploration and production in the Americas.

This technological advancement comes more than a decade after the disastrous 2010 blowout at the Macondo prospect in the Gulf of Mexico, which resulted in the loss of 11 lives and significant environmental damage. Transocean, which operated the ill-fated Deepwater Horizon rig, and BP, the owner of the Macondo project, are both involved in the new, higher-pressure well developments.

The industry has learned from past incidents, developing new drilling ships and equipment capable of handling the extreme pressures that exceed those encountered during the Macondo failure. "The industry has taken significant steps to ensure the safe extraction of these resources using the latest technology," said Mfon Usoro, a principal analyst at Wood Mackenzie, specializing in Gulf of Mexico operations.

The newly developed equipment is expected to facilitate the extraction of around 300,000 barrels of oil from projects like Chevron's Anchor, as well as similar initiatives by Beacon Offshore Energy and BP. This could make 2 billion barrels of previously untapped U.S. oil accessible to producers, according to Usoro.

“These ultra-high-pressure fields will be key drivers of production growth in the Gulf of Mexico,” Usoro noted. With the region’s output still below its record 2019 level of 2 million barrels per day, this additional oil could help restore peak production levels.

BP, which has developed its own high-pressure technology, aims to tap into 10 billion barrels of known oil reserves. Their first 20,000 PSI project, Kaskida, discovered in 2006, was shelved due to the lack of appropriate technology at the time.

High-pressure, high-temperature oil fields similar to those in the Gulf of Mexico are also located off the coasts of Brazil, Angola, and Nigeria, according to Rystad Energy analyst Aditya Ravi. The Gulf of Mexico will serve as a critical testing ground for the new technology.

Brazil’s major offshore developments, characterized by complex high-pressure, high-temperature environments, are likely candidates for future applications of the 20,000 PSI technology, Ravi said. Globally, more than 5 billion barrels of known oil and gas reserves could benefit from these technological advancements—equivalent to approximately 50 days of current global production.