Rainy -- Lots of optimism about the Lower Tertiary especially moving westward. But, as usual, I'll throw in the qualification that those are exploration estimates. Which means possible reserves...not proven...not even probable. Could be even more but all trends eventually come to an end. As far as rig shortages the future there depends greatly on Petobras' access to future capital IMO. They currently have a lot of floating rigs tied up (including 80% of the rigs capable of drilling in 3000 m water depth or greater). I think most now have a good feel for the oil patch cycles (highs/lows in crude prices/drilling costs, etc) and the associated lag times so we don't need to throw that around much anymore. Normally activity cycles in Deep Water are much longer then the onshore plays but I'm starting to see that differential close up some especially in the GOM (and sending me back to the house or over seas by this summer). It's difficult to change DW time lines too quickly but I've recently seen some fairly quick responses in the GOM.

An aside: PEMEX has 2 or 3 new drill ships scheduled for delivery in the next 12 months or so. They are at least a decade behind the US in exploring their section of the DW GOM. They haven't yet offered any indication of where they plan to deploy them but some folks speculate it may be towards the far western potential edge of the Lower Tertiary. If true this could go a long way towards either tempering or expanding expectations about the play in the next several years.

As far as the eastern GOM that's the real wild card IMO. Though there had been a good bit of unsuccessful drilling in the Destine Dome area some 25+ years ago exploration techniques have improved significantly. Also, most of this area is on trend with the very significant (but very mature) oil plays of Miss and Al. This would be a carbonate (reef+) reservoir play as compared to the sandstone reservoir plays of the Lower Tertiary and central and western shelf areas. This is both good news and bad: difficult to explore but billion barrel fields are certainly possible. For the last 10 years operators have been developing the far western edge of this play just to the east of the Mississippi River delta. It would be very easy (and legitimate) for the explorationists to speculate about 10’s of billions of BO out there. But, again, that only offers a reason to spend some $’s poking around there and not numbers to apply to future production rates estimates IMO.

And another Hubbert reminder. In 1956, Hubbert found that a one-third increase in projected Lower 48 URR, from 150 Gb to 200 Gb, an increase of 50 Gb, only postponed the projected Lower 48 peak by five years.