(Bloomberg) -- Chevron Corp. is studding the ocean floor with heavy-duty pumping gear as part of an effort to make deepwater oil discoveries competitive with shale.
The idea is to force crude from newly drilled wells in the deepest parts of the Gulf of Mexico to flow through miles and miles of pipe to platforms built a decade or more ago, said Jay Johnson, Chevron’s executive vice president for upstream. By lopping off the billions it would cost to construct each new platform, offshore exploration begins to make economic sense again.
“So new areas like Anchor, Waterloo, Tiger, Gibson, Whale, Ballymore, we’ve got a portfolio of new discoveries waiting for development as we continue to bring these costs down,” Johnson said during a presentation Monday at the Scotia Howard Weil Conference in New Orleans. “There are a lot of questions whether deepwater can compete. But things are changing in deepwater quite dramatically.”
Chevron’s shares, which have 20 buy ratings from analysts and eight holds, climbed 1.2 percent to $116.68 at 12:56 p.m. in New York.
In other offshore news:
- Transocean Ltd. CEO Jeremy Thigpen told the same conference that all but a handful of the 29 current deepwater Gulf projects had breakeven costs in the low $40-a-barrel range.
- “We are in competition for our customers’ capital with shale,” Thigpen said. “We’re doing it.”’
- The dearth of investment in deepwater drilling during the downturn may lead to a squeeze where global crude supplies struggle to keep pace with demand growth, National Oilwell Varco Inc. CEO Clay Williams said during an interview on the conference sidelines.
- “You’re going to start to see more non-OPEC production declines kick in because they’re not going to be masked by these big projects that have been brought online,” Williams said. “That will signal to the world, ‘Hey, we haven’t been investing enough.”’
©2018 Bloomberg L.P.