Offshore fracking shifts to deepwater
From the United States (US) to South America to Africa, energy companies are taking their controversial fracking operations from the land to the sea to deep waters, in what is seen as the next frontier for offshore drilling.
The shift to the deep waters is a boon for oil service providers such as Halliburton, Baker Hughes Inc., and Superior Energy Services Inc. Schlumberger Ltd., which provides offshore fracking gear for markets outside the US Gulf, also stands to get new work.
Besides, producers such as Chevron Corporation, Royal Dutch Shell Plc and BP Plc stand to reap billions of dollars in extra revenue over time as fracking helps boost crude output.
Cracking rocks underground to allow oil and gas to flow more freely into wells has grown into one of the most lucrative industry practices of the past century. The technique is also widely condemned as a source of groundwater contamination.
Offshore fracking is a part of a broader industry-wide strategy to make billion-dollar deep-sea developments pay off. The practice has been around for two decades yet only in the past few years have advances in technology and vast offshore discoveries combined to make large-scale fracking feasible.
While fracking is also moving off the coasts of Brazil and Africa, the big play is in the Gulf of Mexico, where wells more than 100 miles from the coastline must traverse water depths of a mile or more and can cost almost $100 million to drill.
Fracking in the Gulf of Mexico is expected to grow by more than 10 percent over a two year period ending in 2015, said Douglas Stephens, president of pressure pumping at Baker Hughes, which operates about a third of the world’s offshore fracking fleet.
As demand for offshore fracking has grown, oil service companies have increased the global fleet of fracking ships by 31 percent since 2007, according to a survey by Offshore Magazine, creating a market almost as large as Russia’s onshore industry. The pumping horsepower used to frack wells — a measure of supply — is expected to grow another 28 percent by the end of 2018, to 1.2 million horsepower, estimates Houston-based PacWest Consulting Partners.
In Africa, Nigeria boasts of huge offshore oil and gas resources yet to be exploited amid regulatory and security risks. Current exploration activities in Nigeria are mostly focused in the deep and ultra-deep offshore areas with some activities planned in the Chad basin, located in the northeast of the country, notes KPMG’s 2014 Oil and Gas Africa report, adding that the future for expanding oil reserves is likely to be in deep offshore fields.
FEMI ASU