For decades the exorbitant costs of drilling deep kept commercial rigs close to shore. But shrinking reserves, spiking oil prices, and spectacular offshore discoveries ignited a global rush into deep water. Recent finds in Brazil's Tupi and Guará fields could make that country one of the largest oil producers in the world. Similarly promising deepwater leases off Angola have excited bidding frenzies involving more than 20 companies.
In the Gulf of Mexico, the U.S. Congress encouraged companies to go deep as early as 1995. That year it passed a law forgiving royalties on deepwater oil fields leased between 1996 and 2000. A fleet of new rigs was soon punching holes all over the Gulf at a cost of up to a million dollars a day each. The number of leases sold in waters half a mile deep or more shot up from around 50 in 1994 to 1,100 in 1997.
It wasn't long before the industry hit pay dirt. New fields with names like Atlantis, Thunder Horse, and Great White came just in time to offset a long-term decline in shallow-water oil production. The Gulf of Mexico now accounts for 30 percent of U.S. production, with half of that coming from deep water (1,000 to 4,999 feet), a third from ultradeep water (5,000 feet or more), and the rest from shallow water. BP's Macondo well, in about 5,000 feet of water and reaching another 13,000 feet beneath the seafloor, wasn't particularly deep. The industry has drilled in 10,000 feet of water and to total depths of 35,050 feet—the latter a world record set just last year by the Deepwater Horizon in another BP field in the Gulf. The U.S. government estimates that the deep Gulf might hold 45 billion barrels of crude. "We're in deep water because that's where the resources are," says Larry Reed, an operations consultant in Houston who has worked with many of the major oil companies. Deepwater wells tend to be highly productive, he adds, like wells in the Middle East.
As technology was taking drillers deeper, however, the methods for preventing blowouts and cleaning up spills did not keep pace. Since the early 2000s, reports from industry and academia warned of the increasing risk of deepwater blowouts, the fallibility of blowout preventers, and the difficulty of stopping a deepwater spill after it started—a special concern given that deepwater wells, because they're under such high pressure, can spout as much as 100,000 barrels a day.