Does This Record-Setting Project Signal A Return For Offshore Oil?

Oil prices have been a big item lately — with crude plunging below $45 per barrel in recent weeks. 

But quiet reports across the industry show costs for oil and gas drillers may be falling even faster than that. With recent studies showing that offshore oil projects may actually be feasible at or near current prices. 

That sentiment appears to be trickling through to project activity on the ground. With one first-of-a-kind exploration project announced this week showing that E&Ps are once again going big for offshore targets. 

That project is in the Caspian Sea of central Asia. Where an international consortium of companies signed a “historic” deal this week to drill the deepest exploration well ever attempted by the global petroleum industry. 

The so-called Eurasia project will be attempted by China’s CNPC along with Italy’s Agip, America’s NEOS GeoSolutions, Azerbaijan’s state oil firm SOCAR, and Kazakhstan’s RN-Exploration and KazMunayGas-Eurasia. With those partners having been cooperating for “several years” already in compiling data and geophysical studies on the play. 

Here’s the plan: the partners will now prepare to drill an exploratory well up to 15 kilometers depth targeting oil under the Caspian depression. A feat that would eclipse the previous-deepest well ever drilled, the 12.3 kilometer Kola Bore Hole at Murmansk, Russia. 

This will obviously be a massive technical challenge. But the consortium says the prize could be worth it — with estimates suggesting the deep basin here could hold up to 60 billion tonnes (429 billion barrels) of crude. 

Interestingly, the consortium is moving ahead with this target without the aid of any major names in the Western international E&P business. Meaning that a success here could mean a major shift in power away from the “big names” in the industry to rising players like CNPC.

No timeline was given for the drilling — watch for further announcements from the consortium on when exactly this record-breaker will come down. It won’t be immediate, but this is a potential gamechanger worth keeping an eye on. 

Here’s to going deep,

Dave Forest

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