OPINION // CHRIS TOMLINSON
No one wants to be the canary in the coal mine.
Sacrificing yourself to warn others may sound noble, but most of us would prefer to escape impending death. Economics are uncompromising, though, and when it comes to oil and gas, offshore drillers will be first to go if the peak demand hypothesis proves correct.
Fifteen years ago, deepwater drilling was supposed to quench the world’s endless thirst for oil. Liquid fossil fuels monopolized the transportation sector, and alternatives existed only in research labs and environmentalists’ imaginations.
Onshore sources of oil also appeared to be dwindling in 2003, giving deepwater and even ultra-deepwater wells a bright future. The infrastructure may have cost tens of billions of dollars, but operators promised investors substantial daily volumes of crude that would flow for decades.
The math made even more sense in 2008 when Goldman Sachs predicted oil could soon reach $200 a barrel. That led service providers at the Offshore Technology Conference in 2014 to tout equipment that could withstand extreme pressures and temperatures in ultra-deep wells drilled in ultra-deepwater.
Many executives thought industry competition would center on technology, not cost. A single deepwater...