The revival of deep-sea drilling in the Gulf of Mexico
New technologies and regulatory reforms have boosted the offshore industry, 15 years after the Deepwater Horizon catastrophe
Jamie Smyth in the Gulf of Mexico
Deep in the Gulf of Mexico, a gigantic steel structure about the size of a football field rises out of the blue, surrounded by ocean for 140 miles in every direction.
The oil platform, bristling with cranes and wrapped in miles of pipes and cables, is part of a $5.7bn project called Anchor that is revolutionising how companies drill for the black stuff.
Anchor, which has been developed by US oil major Chevron and its partner TotalEnergies, uses equipment that can operate at ultra-high pressures, about a third higher than previously deployed by the industry, to access previously unobtainable resources.
The platform works in co-ordination with Deepwater Titan, a ship about the size of an aircraft carrier that drills wells to access reservoirs six miles below the water surface at 20,000 pounds of pressure per square inch (PSI), about twice the pressure that specialised structural concrete can withstand.
“She is one of a kind,” says Jason Myers, Chevron’s drill site representative on Anchor, during a tour of the Deepwater Titan.
“It’s going to open up a lot of prospects that . . . we have been unable to explore previously, before we had rigs of this capacity.”
In fact, the equipment isn’t quite unique.
Beacon Offshore Oil, a company owned by private equity giant Blackstone, introduced similar drilling technology in the Gulf in May and Shell and BP plan to deploy it at new projects in 2028 and 2029.
Wood Mackenzie, a consultancy, forecasts the technology will unlock about 2bn barrels of oil and gas that were previously unrecoverable in the Gulf and will be adopted globally.
It could also revitalise an offshore industry that has struggled for years because of a range of factors including the catastrophic oil spill at BP’s Deepwater Horizon rig in the Gulf in 2010, the US shale revolution and global efforts to transition away from fossil fuels.
Investment fell to $18.6bn in the Gulf last year, down from $43.7bn in 2015, when adjusted for inflation, according to Rystad, a consultancy.
The region now accounts for about 14 per cent of US oil production, compared to about a quarter in the early 2000s.
But new technologies and a slower than expected transition away from fossil fuels are breathing new life into the US offshore industry, along with a dramatic loosening of regulation by the Trump administration.
The Gulf, 1.6mn square kilometres of water bordered by the US, Mexico and Cuba, is central to Donald Trump’s vision of unleashing US energy dominance.
The president renamed the expanse of water “Gulf of America” within hours of taking office in January.
He later overturned Biden-era restrictions on drilling and ordered a series of twice-yearly oil and gas lease sales until 2039.
The first of these sales, named Big Beautiful Gulf One, is scheduled for December 10, covering 80mn acres.
The revitalisation of the Gulf could be vital to maintain America’s position as the world’s largest producer of oil and gas, with onshore oil production forecast to fall in 2026 as producers of more costly shale cut investment in response to falling prices.
But not everyone is happy about the offshore drilling boom.
Environmental campaigners warn new projects will lock in oil and gas production for decades to come, undermining pledges made by world leaders to transition away from fossil fuels, just as world leaders gather this month at the global climate summit COP30 in Brazil.
Democratic policymakers accuse Trump of rewarding his fossil fuel donors by slashing climate and safety regulations, putting both coastal communities in the Gulf and American taxpayers at risk.
“We pay for the oil spills, we pay for the rising seas, we pay for the air and water pollution — and the CEO billionaires skate away with big profits,” says Senator Ed Markey, who represents Massachusetts.
Some also question whether the developers of the new generation of ultra-high pressure drilling technologies have truly learnt the lessons of the Deepwater Horizon catastrophe, especially given the loosening of regulations by the Trump administration.
“This is still an industry that largely regulates itself,” says Antonie Jetter, professor of engineering at Portland State University and co-author of a report on the Deepwater Horizon disaster published in 2021.
“People I have talked to as part of this project were concerned that things are deteriorating again after the Deepwater shock.”
The Gulf’s offshore oil industry began almost a century ago, when the Pure Oil and Superior Oil Company built a wooden drilling platform about a mile off the coast of Creole, Louisiana, held in place by pine pilings driven into the seabed.
The technology’s pioneers could hardly have imagined the world of offshore drilling that has emerged since, with more than 6,000 oil and gas structures, dotted throughout the oil-rich waters in the western Gulf off the coasts of Texas and Louisiana.
The extensive build out of pipelines, refineries and other oil and gas infrastructure in the area has lowered the cost of developing new projects, as operators typically don’t have to build everything from scratch.
But as the best oil and gas reserves closer to shore have become depleted, companies have pivoted to explore and develop projects in deeper waters and areas with more complex geologies.
This has made the region a test bed for technologies such as Deepwater Titan and Anchor, which can later be deployed in other parts of the world.
Chevron’s $5.7bn Anchor project is able to suck up to 75,000 b/d from reservoirs under the seabed.
By comparison, a single new shale oil well in the US produces around 1,200 b/d.
It is a key part of Chevron’s target to expand production in the Gulf to 300,000 b/d by 2026, as the company ratchets up competition with its larger US rival, ExxonMobil.
Deepwater Titan was built specifically for Chevron’s Anchor field by offshore drilling specialist Transocean.
It can drill as deep as 40,000 feet and withstand 25 per cent more pressure than any other vessel owned by the company.
Unlike the Anchor platform, which is moored roughly a mile away, the drill ship is not tethered to the ocean floor but maintains its location using an automated dynamic positioning system.
On the ocean floor, Chevron is deploying suitcase-sized nodes to track seismic reflections and produce sharper images, helping to locate oil and gas deposits even in complex geology.
The oil giant is also innovating ways to avoid putting employees at risk.
During a tour of the Anchor control room, Neil Menzies, Chevron’s director of Gulf of America, describes how the facility can be fully operated from onshore — what he calls “hero mode” — allowing the facilities’ 120 employees to safely evacuate while maintaining production as hurricanes approach the platform.
Other companies are making similar moves.
Shell, which is the largest operator in the Gulf with 11 offshore facilities, has deployed robotic dogs and drones to do inspections that previously would have been undertaken by employees and virtual reality headsets to enable staff deployed onshore to support workers complete tasks offshore safely and more efficiently by using digital twin technology.
“I can see a place in time where we have much less manning on our facilities than we do today,” says Colette Hirstius, president of Shell USA, who is responsible for the company’s Gulf operations.
But the industry’s renewed excitement about the Gulf’s potential for growth is being driven as much by politics as new technologies.
The fossil fuel industry generally has been galvanised by a global shift in governments’ priorities, as the war in Ukraine refocused attention on the importance of energy security, and the boom in energy-hungry artificial intelligence technologies has prompted a reassessment of peak oil demand by forecasters.
Last week, the International Energy Agency revised its projection that fossil fuel consumption would peak this decade, saying under current policies it would rise for the next 25 years.
“There has been an energy transition from the energy transition,” says Daniel Yergin, vice-chair of financial data group S&P Global.
“There is a lot more confidence in the future of oil and gas that we didn’t see during the Covid pandemic and this gives producers more confidence to invest in longer cycle offshore projects.”
Gulf producers in particular have been boosted by Trump’s re-election in the US.
His administration has prioritised unlocking what it calls the “treasure trove of energy” beneath the waters.
In April, it implemented new guidelines allowing offshore companies to produce oil and gas from multiple reservoirs with different pressure levels through a single well.
These so-called “commingling” rules cut costs by reducing the need for operators to drill additional wells, but it can create technical challenges, which critics say could increase risks of accidents.
The One Big Beautiful Act, which passed Congress in July, provided tax breaks and other incentives for the industry, including cutting the minimum royalty rates paid by Gulf producers to 12.5 per cent, from 16.7 per cent.
It overturned Biden-era restrictions on offshore drilling and established a new 15-year programme of twice-yearly lease sales in the Gulf, a move industry says was critical to give them confidence to embark on new projects.
The Trump administration is also considering opening waters off the coast of California and Alaska for oil and gas drilling.
As a result, Rystad forecasts oil production in the Gulf will grow 6 per cent this year and 3 per cent next year.
Shell and Chevron tell the Financial Times they will bid in next month’s Big Beautiful Gulf One lease sale and has greater confidence in the new structures put in place by the Trump administration.
“In past years we have had deferred lease sales, cancelled lease sales and legal challenges to lease sales, which create a much more difficult kind of functioning and working environment.
Now we have lease sales in the Gulf as part of the law.
That’s, I think, a big step forward,” says Shell’s Hirstius.
Yet despite the Trump’s administration’s pro-fossil fuel policies, maintaining US crude production at current levels is far from assured.
The US Energy Information Administration forecasts US crude production will peak this year at 13.5mn b/d, before dipping slightly in 2026 due to plunging oil prices linked to a global supply glut.
The US shale industry on average needs a price of $65 a barrel to make a profit, and crude prices have fallen this year to close to $60 per barrel.
Rising costs linked to Trump’s tariffs on steel have caused many US onshore operators to cut drilling rigs, lay off fracking crews and slash investment to protect their profit margins.
But despite large upfront costs, offshore oil and gas projects can have break-even costs as low as $20 a barrel, as their production phase can span several decades.
The US shale industry may also be entering a twilight phase, as the best onshore resources have been depleted, just as a new wave of technology development enables operators to tap new basins offshore, say experts.
“Questions are starting to arise about the continued long-term economic viability of onshore basins,” said Paul Goodfellow, chief executive officer of Talos Energy, a Gulf producer, in a June strategy call with analysts.
“At the same time, technological advancements have unlocked significant deep water reserves . . . we believe that offshore production will play an increasingly larger role in filling the global energy demand.”
Offshore producers in the Gulf may be optimistic about the future, but they still face challenges in the short and longer term.
The record oil production forecast for 2026 and 2027 is set to be achieved following big investments in previously undeveloped or greenfield projects and exploration carried out up to a decade earlier.
Despite Trump’s regulatory bonfire in the US, production in the Gulf is forecast to drop back to 2024 levels by 2030 due to a slowdown in new projects over the next five years, unless oil companies ratchet up investment.
But the sharp fall in oil prices caused by a looming supply glut is forcing many companies to cut back on capital spending globally, according to Wood Mackenzie, which forecasts a 2 per cent reduction in 2026 and deeper cuts if prices slip below $60.
Industry executives, who plan multibillion-dollar projects with decades-long time horizons, are also aware that the pro-fossil fuel agenda pursued by Trump could be overturned at the next election.
There are already signs that Democrats and environmental campaigners are organising to fight the oil industry.
In the Gulf, they have singled out a plan by BP, the operator of Deepwater Horizon, to deploy ultra-high pressure drilling at their Kaskida project, which is planned 250 miles off the Louisiana coast.
In August, Democratic senators wrote a letter to the US Bureau of Ocean Energy management urging the agency to reject BP’s application.
“Fifteen years after the Deepwater Horizon disaster, we know the cost of safety shortcuts and weak oversight: workers’ lives lost, livelihoods destroyed, and ecosystems scarred,” they wrote.
BP rejects this criticism and said it is committed to developing Kaskida, a field that was discovered in 2006 following drilling by the ill-fated Deepwater Horizon rig.
“The safety of our people and the environment will remain our highest priority throughout this project and in all our operations,” it said in a statement.
But the reliance on highly complicated new technologies presents new risks that oil companies may not be equipped to handle, warns Jetter, co-author of the Deepwater Horizon report.
“More complex operations, more automation, more different contractors . . . seem to make it more difficult to understand what is going on and develop situational awareness,” she says.
“And there are still no robust process safety and risk management frameworks.”
On board Anchor, Chevron’s Menzies says safety is Chevron’s “top priority” and rejects any suggestions that the new technology raises risks of an accident.
“We worked very closely with the regulator, the Bureau of Safety and Environmental
Enforcement, to verify independently that we had effective equipment to manage the pressure and the threats that we’re dealing with,” he says.
The offshore regulator BSEE conducts training programmes, equipment inspections and no-notice drills to test operator’s preparedness for crisis situations.
The company’s employees are hopeful Trump’s favourable policies remain in place and Anchor can lay the foundations for decades of growth in the Gulf.
“This is a constant, sustainable industry.
It’s not going anywhere just because the flavour of the four years change.
It’s going to see itself through,” says Russell Benoit, who started working with Chevron in the Gulf in 2004.
But Andrew Hartsig, an expert on offshore oil and gas policy at Ocean Conservancy, an environmental group, cautions that Trump’s short-term policy swings have not created the type of certainty required by industry to make long-term investments.
“The ping-ponging of administrations, those things seem to move back and forth pretty rapidly,” he says.
“To me, it seems like there’s still a lot of uncertainty about where the policy is going to be in five years or 10 years.”
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