Release Date: October 20, 2003

PITTSBURGH, PA - In a project funded by the U.S. Department of Energy's National Energy Technology Laboratory (NETL), researchers are conducting important geologic tests to determine how oil wells in the oceans can be stabilized while drilling in slabs of salt thousands of feet thick. Initial results are promising.

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The $3-million, four-year project supports the President's National Energy Policy, which calls for increasing domestic energy supplies through development of advanced technologies. At stake is the economic development of the fuel reserves below the vast 1,000-mile-wide seas of the Gulf of Mexico, which many developers believe is the United States' last major source of petroleum outside the Alaska wilderness.

"The President's National Energy Policy cites 21st century technology as the key to environmental protection and new energy production, and it specifically highlights deep water drilling technology for oil and gas," said Mike Smith, Assistant Secretary for Fossil Energy. "Projects such as this can increase our Nation's energy security while reducing costs to oil producers and protecting the environment."

The Gulf of Mexico is located at the southeastern corner of the United States, and is flanked by the United States to the north, Mexico to the south, and Cuba to the southeast. This enormous body of water is nearly 800 miles from north to south, and more than 2 miles deep in some sections. Beneath these waters lie estimated reserves of 28 billion barrels of oil. By comparison, the mainland United States had 32 billion barrels of proven reserves in 2002.

The Gulf is dotted with thousands of oil and gas rigs, but only recently has production begun in the deepwater portions of the Gulf. By 2005, as much as 67 percent of daily oil production and 26 percent of daily gas production in the Gulf will come from deepwater fields.

According to Purna Halder, a geophysicist at NETL, the underwater topography and geologic structure of the region make it a difficult and expensive place to drill. Unlike traditional underground patterns found when boring land-based wells, the formations underlying the Gulf are not as well understood by those seeking to recover the treasure trove of oil.

"Huge formations of salt - thousands of feet thick in places - underlie the Gulf," said Halder. "Oil and gas are found thousands of feet below the salt in traditional sand formations. The way this salt is distorted by pressures and movements is of keen interest to those who do the exploration." The process by which the salt is stressed is called deformation.

"Even without the oddities of salt, these wells are engineering marvels," said Jerry Casteel, who manages the project for NETL. "Some are 20,000 feet under the surface, slicing through thousands of feet of salt and into sedimentary rock, after penetrating 8,000 feet of water. The cost of drilling a well can run upwards of $100 million, and any collapse or severe damage can deal an enormous blow to domestic production."

As part of the joint government-industry project, researchers at Sandia National Laboratories in Albuquerque, N.M., are using sophisticated computer models to help industry determine stable locations where drilling can take place through or near salt formations. The project's two major thrusts are predicting stresses under the surface in and adjacent to salt formations to ensure stability during drilling, and determining what load the well casings can carry to ensure the well's viability during its production lifetime. The research provides essential guidance to optimize well trajectories and casing designs to ensure economical production from sub-salt and near-salt reservoirs.

The improved insight that has resulted from the work so far has been applied in two of the five largest oil fields in the Gulf: the Thunder Horse North and Mad Dog fields operated by London-based BP, along with multiple partners. The more aggressive well casing design implemented in the Thunder Horse North field resulted in well construction cost reductions of more than $30 million, according to BP's estimates.

"Working with [the Department of Energy and this research team] on salt mobility, we have identified ways of positively impacting the project economics and delivering a more reliable solution ?this epitomizes the manner in which government agencies and industry can collaborate to produce extraordinary results," said Bernard Looney of BP.

The research results are being applied to other deep reservoirs in the Gulf, and research is ongoing.

In addition to NETL, Sandia, and BP, project partners include Australia-based BHP Billiton Ltd., ChevronTexaco Corp. of San Ramon, Calif.; ConocoPhillips Co. of Houston, Texas; ExxonMobil Corp. of Irving, Texas; Halliburton Co. of Houston, Texas; Kerr-McGee Corp. of Oklahoma City, Okla.; and Netherlands-based Royal Dutch/Shell Group subsidiary Shell International Exploration and Production Inc.