Energy September 1, 2009, 10:10PM EST

What BP's New Oil Strike Means

(page 3 of 3)

THINKING SMALL

BP management told its explorers to go back to the drawing board. They had been drilling spots that looked good on seismic surveys, the maps generated by bouncing sound waves off the rocks below the earth's surface, but that approach had failed. So armed with new technology that allowed them to drill much deeper, the explorers went back to basic petroleum geology: Their aim was to figure out where in the gulf large amounts of oil, which is formed from the remnants of microorganisms that died millions of years ago, might have migrated up through the earth's crust and then hit a seal of rock and salt. "You have to learn to think like an oil molecule," Rainey says.

One BP explorer, Neil Piggott, even went 2,000 feet down in a submarine to get a firsthand look at oil and gas seeping out of the sea bottom. There in the inky darkness he saw masses of bacteria feeding on the oil and bizarre 30-foot-long tube worms that in turn were eating the bacteria. The seeps were further evidence that there was more oil farther out in the gulf.

The explorers soon identified Thunder Horse as a potential "elephant"—industry slang for a colossal find. But skeptics inside BP worried that the rocks bearing the oil were so deep and subject to such high temperatures that they would not be porous enough to let oil flow through. BP decided to drill an exploratory well to find out. In April 1999, the well hit oil.

Recently, the company's exploration team has been locking up positions in even more difficult areas west of Thunder Horse. In August, BP led the bidding at the biannual lease auctions held by the Minerals Management Service of the Interior Dept. in New Orleans. BP bid about $50 million of the $145 million bid by all companies for about 40 tracts in the western gulf near Tiber.

BP has also been coming up with new ways to see through the ancient salt layers, thousands of feet thick, that cover much of the oil and gas accumulations in the gulf and other deepwater regions. Oil companies had shied away from the salt because it distorts seismic waves, obscuring what's underneath. But BP's team has figured out how to look under the salt by employing new techniques, such as towing ribbons of seismic sensors behind boats over suspected fields to obtain sharper images of what lay below. "We stopped being afraid of the salt," says Yeilding, who has spent time in France and Canada studying rock formations like those at the gulf's bottom.

Deepwater is now a favorite haunt of BP. The company is a major presence in the waters off Angola and is probing the Beaufort Sea in the Canadian Arctic. BP likes to apply what it has learned in the gulf and Alaska to other zones. One play it is beginning to scope out is the Gulf of Sirte off Libya, where prospective oil and gas deposits lie in the sands put down by ancient river systems. Outbid in open bid rounds, the company spent two years lobbying Muammar Qaddafi to grant BP a concession involving huge swaths of offshore and onshore acreage exceeding the size of Belgium. Daly says the next meeting of his explorers will give the green light to the first Libyan wells.

The BP exploration group knows that no matter how many Thunder Horse and Tiber winners they hit, they had better not become smug. Two years ago they drilled a prospect in the gulf that had them so excited they called it Big Kahuna. As it turns out, they had the geology wrong and found nothing. "We try to stay humble," Rainey says. "When we don't, we get kicked in the behind."

Reed is London bureau chief for BusinessWeek.

Reader Discussion

 

BW Mall - Sponsored Links

Buy a link now!