Offshore staff

HOUSTON -- Del Richter, subsea operations coordinator at Chevron told webcast attendees at the DOT conference in Houston Wednesday that high oil prices will not resolve the industry's deepwater challenges. "Sixty-dollar oil does not solve everything in deepwater," he said.

Revenues in the oil and gas industry have hit all-time highs, Richter said. However, high returns on present investment have not removed the hurdles to raising production levels from deepwater reservoirs. A lot of technical challenges remain, he said.

Some of the challenges Righter identified include more difficult reservoirs and gaining access to potential new resource areas. "Not everyone wants to let us in," he said.

Other challenges include high exploration and development costs in hostile environments and carrying out engineering, manufacturing, and fabrication in host countries. Helping to build in-country capabilities is "an added burden and a unique challenge," he said.

Despite these hurdles, Richter said, water depth records continue to be made. And despite the fact that there is still significant lag time, "We're closing the gap between exploration and production," he said.

Richter closed with a list of ways to succeed in deepwater. "Know your reservoir," he said. "Recover as much as you can as fast as you can, and manage your investment wisely."

Richter also pointed out the need to build on operational excellence and to establish effective partner relationships.

Finally, Richter said, invest more in the leading edge of the exploration process - geology and geophysics. "Love your geoscientists and reservoir engineers," he said.

11/29/2006