As people who are familiar with my writing know, popping the deepwater-production myth is one of my pet projects.  The first discovered, most profitable, and most explored and understood deepwater basin in the world is the US Gulf of Mexico. The oil industry still sees this basin as a growth basin with lots of exploration potential.  I am staring at an industry 2004 report that indicates a "yet-to-find" volume of more than 25 billion barrels of oil and oil-equivalent gas by 2014 for this basin.

Contrast that with the numbers to come out of the O&GJ article indicating both the magnitude of decline of the currently-booked deepwater reserves (both oil and gas) in the US and the small volume recorded as new-field discoveries.  Thirty-tree million barrels in new field oil reserves is less than 2 days consumption in the US. The poor record of exploration success was not for lack of trying, as many deepwater exploration wells were drilled in the GOM in 2004 (trying to find the number, but probably more than 25 and less than 100).

It should be obvious that there is a major disconnect here.  However, there is a strong institutional bias to not acknowledge that the emperor has no clothes.  There are huge exploration groups, programs, and capital budgets all set up and in place to explore for oil in the deepwater GOM.  If history is our guide, many many billions of dollars will have to be spent failing at finding significant volumes of new oil in the GOM for those programs to be shut down and the resources directed elsewhere.

As far as the rest of the world is concerned, you really have Brazil and West Africa.  Everything else pales in comparison, and those two other areas have been heavily explored.  The easy volumes have been found.  Those are the ones that could be seen directly on seismic data.  Now we are just muddling around in the dark like the old days.

The biggest problem that I see is this waste of resources on a "dying patient" that could be spent, given an acknowledgement of the problem, on a transition strategy to alternative energy schemes.  You may think that oil companies are just greedy, money-making, environment-destroying machines, but they are really large bureaucracies that will work very hard to defend the status quo and internal balance of power, even at the expense of making money.