As the oil and gas industry gathers for the annual Offshore Technology Conference (OTC) in Houston, deepwater discoveries off Guyana, Namibia, and the U.S. Gulf Coast will take center stage. After the U.S. shale boom ushered in new and cheaper-to-tap supplies of oil, offshore exploration had dimmed, and past deepwater cost overruns had pushed these projects onto the industry’s backburner.
However, newer deepwater projects are now seeing a resurgence in popularity among Big Oil companies. These projects offer attributes that oil and gas companies are looking for, including longer-term production, lower breakeven costs, big resource potentials, and lower carbon emissions, according to Pablo Medina, head of new ventures at energy consultants Welligence.
“Deepwater is back in vogue,” Medina said.
Capital spending on all-new deepwater drilling is poised to hit a 12-year high next year, predicts consultancy Rystad Energy. Investment in all-new and existing deepwater fields could hit $130.7 billion in 2027, a 30% jump over 2023.
“The return of offshore and deepwater operations is going to be a big topic at OTC, and Namibia is going to be talk of the show,” said James West, senior managing director at financial firm Evercore, referring to the recent series of oil finds off the west African coast.
The renewed interest in deepwater exploration reflects the industry’s shift toward projects with longer-term, lower-carbon production profiles, as major oil companies seek to balance their portfolios and meet climate goals.