1998 Year of the Ocean Ocean Energy and Minerals 



New Frontiers for Conventional Hydrocarbons 



Exploration and development have been moving to remote areas such as deep water 

 provinces, Arctic areas, and isolated natural gas fields, where there has been limited drilling. 

 Interest in OCS deep water areas has increased in recent years, especially in water depths greater 

 than 800 meters, because of better technology, new discoveries in deep water, and the passage of 

 the Deep Water Royalty Relief Act. 



While the Arctic presents unique engineering and envirormiental challenges, there is 

 potential for significant new discoveries on the North Slope of Alaska and in the Beaufort Sea. 

 Proposed development of past discoveries has created an optimistic outlook for the future. 

 Meanwhile, it must not be forgotten that oil and gas are being produced from the OCS offshore 

 southern California. And although there is a current halt on leasing off the Pacific coast, the area 

 holds vast reserves of oil and gas that may prove important to the nation in the future. 



New Technologies for Finding and Recovering Oil and Gas 



Three-dimensional seismic acquisition, modeling, and interpretation have greatly 

 increased the efficiency of oil and gas exploration. As a result, fewer wildcat wells are being 

 drilled, and more of them are discoveries. The renewed interest in deep water areas is being 

 credited to better technology including three-dimensional seismic and horizontal drilling. For 

 example, computers are now used to process geological and geophysical data and to create three- 

 dimensional subsurface interpretations. This allows companies to identify reservoirs in 

 progressively deeper water. Extended-reach or horizontal drilling has increased in the last 5 years 

 due to higher production rates and greater recoveries from both new and existing wells. 

 Horizontal drilling brings a larger portion of the reservoirs into contact with the wellbore, 

 thereby increasing the flow rates. Besides the ability to increase recovery in borderline fields and 

 protect environmentally sensitive areas, horizontal wells can provide geological information for 

 sidelong distances up to 5,000 feet in a single formation. It is estimated that over the next 5 

 years, from one-third to two-thirds of all new wells will be horizontally drilled. 



Methane Hydrates: Unconventional Hydrocarbons 



Within the last decade, research has shown that most continental margins are reservoirs 

 for an unconventional energy deposit. Immense amounts of gas are concentrated in frozen, ice- 

 like gas hydrates within the top several hundred meters of sediment in deep water on the 

 continental margins of the United States, from the Gulf of Mexico to the Alaska arctic. The 

 worldwide amount of methane in gas hydrate deposits is conservatively estimated to be the 

 equivalent of at least 1 x 1 0"" gigatons of carbon. This is about twice the amount of carbon held 

 in all conventional fossil fuels on earth. Gas hydrates may prove to be the only hydrocarbon 

 resource that could significantly affect the future world energy mix. The production history of 

 the Russian Messoyakha gas hydrate field demonstrates that gas hydrates can be produced by 

 conventional methods. Gas from hydrate deposits may become a major energy resource if 

 economically profitable techniques are devised to extract the methane. 



D-10 



