Deepwater discoveries signal life in offshore sector

January 31, 2018

Some of the world's biggest oil companies announced this week that they've made major deepwater discoveries in the Gulf of Mexico and North Sea, signaling that the moribund offshore energy sector is coming back to life as rising oil prices and lower development costs hold the promise of new profits.

Chevron, Royal Dutch Shell, BP and the French company Total revealed their discoveries within a 24-hour period Tuesday and Wednesday, shifting attention from the Permian Basin in West Texas, which has become the center of the industry's rebound from the last oil bust. This new activity offshore could provide a much needed boost to the explorers, drillers and equipment makers that employ tens of thousands of people in the Houston area.

Houston is a major hub for the global offshore oil industry and a base of operations for the Gulf of Mexico. Some of the world's biggest offshore players are headquartered or have major operations here, including TechnipFMC, National Oilwell Varco, McDermott International and Transocean.

"It's great news on the discoveries and it's an expanding trend. I expect there's more to come," said Bob Fryklund, chief upstream strategist for the IHS Markit research and consulting firm. "Deepwater has just about hit bottom on costs, so it's the start of a long recovery."

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