Two major discoveries announced last week have brought signs of life to a Gulf of Mexico oilfield that continues to struggle amid a three-and-a-half-year bust.
But if and when the finds, or any other trend, will put Houma-Thibodaux residents back to work offshore remains uncertain.
Chevron and its Paris-based partner, Total, announced a major oil find last week about 100 miles southeast of Port Fourchon.
Meanwhile, Shell announced one of its largest Gulf finds in the past decade from the Whale deepwater well about 200 miles south of Houston.
Company officials said both discoveries reinforce their commitment to oil and gas development in the Gulf.
“Deepwater is an important growth priority as we reshape Shell into a world-class investment case,” Andy Brown, upstream director for Royal Dutch Shell, said in a news release. “Today’s announcement shows how, through exploration, we are sustaining a strong pipeline of discoveries and future projects to sustain this deepwater growth.”
Shell owns 60 percent of the Whale development, Chevron 40 percent. The find is about 10 miles from Shell's Perdido platform.
“Whale builds on Shell’s successful, nearly 40-year history in the deep waters of the Gulf of Mexico and is particularly special in that it offers a combination of materiality, scope and proximity to existing infrastructure,” said Marc Gerrits, Shell's executive vice president for exploration. “The result is another opportunity to think differently about ways we can competitively develop deepwater resources.
Close proximity to existing platforms has helped companies lower the cost of producing oil in the Gulf.
"Traditionally, the way a field is harvested once all the wells are drilled, is to spend billions on a new production platform just for that field," Louisiana economist Loren Scott says in his annual economic forecast, delivered in a speech to Houma-Thibodaux business executives in October. "Now, firms are cooperating among themselves to use subsea tiebacks to an existing platform in close proximity."
That, along with other innovations, has meant producers don't need as many of the platforms built and serviced by many companies in Terrebonne and Lafourche parishes, he and other analysts have said.
Scott forecasts the area will lose another 1,800 jobs this year before gaining 700 in 2019. The area has already lost an estimated 16,100 jobs since the bust began.
A global crude oil glut forced prices from a high of $155 a barrel in 2014 to as low as $26 a barrel two years later. Brent crude, the international benchmark, has traded around $68 a barrel in recent weeks, with U.S. oil slightly below that.
The U.S. industry has rebounded, but job growth has been limited mostly to inland shale fields, where drillers can break even at less than half the $60-a-barrel prices most deepwater operations require. Scott and others say companies have reduced break-even costs on some deepwater projects to $40 or $50 a barrel.
Analysts, meanwhile, differ over whether prices’ upward trend will continue and if it will be enough to spark a rebound in the Gulf oilfield.
Energy consulting firm Wood Mackenzie, in a report last month, said it expects investment in the deepwater Gulf to rise this year.
“Although deepwater Gulf of Mexico has taken quite a beating over the last three years, the industry has clawed its way back to being competitive by significantly cutting costs, improving efficiencies and tightening up the supply chain,” William Turner, Wood Mackenzie’s senior research analyst and lead author of the report, said in a news release. “2018 will be a forward-looking year for the sector as it lays the foundation for longer-term resurgence in 2019 and beyond.”
The report also predicts companies will increase the kinds of efficiencies and innovation that have raised questions about how many, and what kinds of jobs might be demanded if and when a Gulf rebound occurs. They include increased use of automation as well as supercomputers and improved seismic imaging tools to find oil.
"The potential for advanced digital capabilities to improve deepwater competitiveness and productivity are monumental," Turner said. "In 2018, the industry will finally begin to widely embrace and implement buzzwords like internet of things, automation and big data to achieve new and sustainable efficiencies and optimizations that decrease unplanned downtime, improve maintenance processes, extend asset and equipment life and reduce costs."
-- Executive Editor Keith Magill can be reached at 857-2201. Follow him on Twitter @CourierEditor.