A Charred Life 
Oil and Water
Yes, they do mix in the Gulf of Mexico, where new technology has transformed a dead sea during the bust years into the site of a new oil boom.
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Now the clock was ticking: Under federal law governing drilling in shallow water, Phillips had only five years to find oil; otherwise its leases to drill on the properties would expire. Working on a Cray supercomputer, Kay Wyatt’s seismic-imaging team managed to perform an early type of depth migration, and Mahogany became the first of the fifteen prospects to be drilled when Phillips decided it looked more exciting and easier than the other locations. Drilling was clearly going to be expensive; Dorse Walton, the team’s drilling engineer, had been studying well logs of other companies’ experiences in and below salt, and he predicted that the Mahogany prospect would cost about $10 million to explore (it ended up costing $12 million). That was a lot of money to spend on one well—twice what the well would have cost if it hadn’t gone through salt—but as Phillips would learn, the company got off easy that time. Subsequent wells showed that drilling through salt often causes difficulties that run the total tab up to $20 million.
Phillips decided to share the risk with partners and signed a deal to split Mahogany’s costs and profits with Anadarko Petroleum and Amoco early in 1993. To work on the project, the partners hired a crew from the Diamond Offshore drilling company. Mahogany sits right on the edge of the continental shelf, in 370 feet of water, so Diamond Offshore brought in a semi-submersible rig. Although it is held in place by ten anchors when drilling is going on, the rig can maneuver like a boat and was brought across the Atlantic from the North Sea for the job. Diamond Offshore began drilling a wildcat well at Mahogany in the spring of 1993. “The first well was really exciting because we didn’t know what to expect all the way down,” said Wallace. “In general the salt drilled a little bit faster than we expected. The problem was right below the salt. It’s a high-pressure area and the salt acts like a seal and that causes different geology right below.” Just under salt, the crews found an interval of unstable rock, trapped under great pressure, and the well constantly threatened to collapse on itself. “We spent a couple of months in that zone,” said Wallace.
Amazingly, the seismic-imaging team had predicted nearly to the foot where the salt layer would end. Now they would learn if they had been able to see below the salt layer with any accuracy. That September, the drilling crew found a huge oil field only one hundred feet from where the seismic team had said it would lie—an effective bull’s-eye. “You pat yourself on the back and say, ‘My god, I can’t believe I guessed right,’” said Holly Harrison, a geologist who worked on the find. Last April, Phillips announced that the field was commercially viable and would be developed. Wallace declined to estimate the amount of oil in the Mahogany find, but sources at Phillips said they think they’ll get 100 million barrels from the field. Production is supposed to start late this year. After Mahogany, Phillips began drilling below salt at other prospects, and the possibility of finding huge new reserves in shallow water—where all the big fields were supposed to have been discovered years ago—has caused a rush of lease purchases and drilling. This past November, the second commercially viable subsalt discovery, called Enchilada, was announced by Shell and its partners, Pennzoil and Amerada Hess.
IN 1994, AFTER DECADES OF RESEARCH and exploration, Shell Oil (the domestic arm of the multinational Royal Dutch Shell) began pumping oil up to the deepest offshore oil-producing platform in the world, called Auger. The platform sits in the Gulf of Mexico in 2,860 feet of water. Typical structures on the shelf stand above the water on fixed legs, but Auger floats like a ship; it is tethered to the distant seafloor by twelve steel pipes and kept in place by eight mooring cables that fan out in different directions. The platform is located in the Garden Banks area, 137 miles from shore, and crew members, who serve fourteen-day shifts, are ferried there in helicopters that depart from Morgan City, Louisiana. On the morning I went out, many of the crew members waiting to depart had driven all night to get there: The oil field draws men from all parts of Mississippi, Alabama, Arkansas, Louisiana, and Texas. They were entirely nonchalant about the strange commute. Ten minutes into the helicopter ride, I looked up from the mesmerizing pattern of marshland and estuary below and saw that the cabinful of men had their heads bowed, as if we were in church. Every one of them had fallen asleep.
About an hour and a half later, past the clusters of rigs up on the shelf and after a long expanse of empty ocean, we arrived at the Auger platform. From the air, it looked like a Erector Set contraption, but when we set down, it became clear that Auger is a state-of-the-art, deluxe (there are elevators) marvel of engineering. The platform is the size of two football fields, and I could feel it swaying back and forth. “We’re like a cork in the water,” said Mike Woodward, Auger’s production supervisor, who lives in La Grange. To accommodate the motion, the eight wells then flowing were attached to the platform by flexible joints that move like the body of an accordion.
Auger’s operations are overseen from a control room lined with banks of computer screens. The person in charge of production and incoming helicopter traffic sits in a chair known as the hot seat, in the center of the room, in front of a semicircular array of computers. Additional staff monitor the surrounding waters with radar—Auger sits twelve miles south of the major shipping lanes to Mexico and the Caribbean, and sometimes the vessels need to be reminded to keep to their course. “They drive all over the place out here,” said John Blackwelder, Auger’s control room operator. In an office nearby, marine technicians employed by Oceaneering International who are under contract to Shell perform underwater maintenance with a remote-operated vehicle—human beings cannot survive at the depth Auger is anchored. The vehicle looks like a submersible golf cart with mechanical arms, and the engineers maneuver it from their office with joysticks while watching the television screens above their consoles, which show murky underwater scenes captured by cameras attached to the vehicle. Every once in a while, some peculiar deep-sea creature will wander in front of the vehicle’s headlights. Dave Housteau, a technician who was on duty when we visited, played a videotape of the year’s highlights, and we watched, increasingly awestruck, as a parade of strange forms drifted by: a giant, shimmering, translucent jellyfish; a shark circling in lazy figure eights; a squid that looked like a flying chiffon outfit.
All the floating technology is, of course, expensive. The tab for the Auger platform came to $1.2 billion. After building it, Shell decided to embark on additional deep-water projects; all told, the company plans to spend about $5.3 billion to develop seven different prospects in deep water (that figure doesn’t even include the amount spent on exploration or leases). Together with additional investments in shallow water, those expenditures represent the vast bulk of Shell Oil’s exploration and development ventures. In other words, the domestic arm of Royal Dutch Shell has staked its future on the Gulf.
Shell began investing in deep water more than a decade ago, when it stunned competitors by snapping up the majority of deep-water leases sold in 1983 and 1984. No other company bet as heavily on the play at that time because nobody was certain oil had been generated in that part of the Gulf in significant quantities or that there were reservoir sands out that far to trap the oil. Even if both oil and sand existed in deep water, nobody was certain that it was technologically possible to produce oil from the area, or economically feasible to try. But if the deeper regions of the Gulf were rewarding, then Shell wanted to be there first. “You make the most profit by getting in early and exploiting a new concept before anyone else thinks to do so,” said Don Haefner, a geophysicist who worked on the Auger project.
Shell had been studying deep-water territory around the world for several decades, and by means of an exploratory drilling program called Eureka, which took place in the sixties, it had learned that oil was indeed being generated in the deeper parts of the Gulf and was seeping up through vents in the ocean floor—the company didn’t know what quantities of oil might have been generated, but it was confident there was a “charge.” It took longer to figure out whether sand traps existed that far from shore. Sediments on the shelf are typically laid down directly by the Mississippi and are therefore called deltaic deposits. To many geologists, it didn’t seem likely that the river would carry significant amounts of sand out into deep water. They didn’t know that other agents—underwater rivers known as turbidity currents—were transporting sand that far. Turbidity currents are rolling forces that form when sediment becomes suspended in water. They were first discovered after an underwater earthquake struck off the coast of Newfoundland in 1929; over the next thirteen hours, some force snapped five transatlantic telephone cables, traveling more than three hundred miles to do so. In the Gulf such currents have carried long trains of sand and mud from the continental shelf out into the abyss beyond. When a sand-laden current runs into some obstacle, it doubles back on itself, spilling caches of sand that can serve as reservoirs to trap oil.
In the early eighties, armed with a rudimentary understanding of turbidity currents and oil seeps, Shell decided to invest in deep-water properties to see what they would yield. One of its early finds was the huge Bullwinkle Field, in 1,353 feet of water. Fortified by that triumph, the company decided to find out whether it would be profitable to venture even farther out. “Shell bought about ten prospects that were considered very speculative,” said Mike Forrest, who was in charge of the company’s offshore exploration in the eighties and now works for Maxus Energy. “They were in water depths ranging from one thousand feet to four thousand feet, so it was a big step out. We named all the prospects for different kinds of tools, and one of them consisted of two blocks that we called Auger. At the time, we didn’t recognize what it was.”
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