Last year yielded larger oil discoveries worldwide than did the 1970s or the 1980s, and the 1999 discoveries of the most consequence are those in deep water, according to Robert Esser, a researcher for Cambridge Energy Research Associates. He predicts that daily crude-oil capacity worldwide will increase 5 million barrels by 2002; two-thirds of this additional capacity will come from OPEC. Speaking to reporters during a briefing at the CERA conference in Houston recently, Esser said last year's oil discoveries were the biggest of the decade despite the 1998 slump in oil prices, which resulted in lower exploration spending by oil companies. "Companies never did cut back on their deepwater drilling," Esser said. "Deepwater will be the venue of the future...The big exploration play is in the Gulf of Mexico." Meanwhile, U.S. drilling is focused on gas rather than oil right now, Esser said. Daily U.S. natural gas production capacity has declined 2 billion cubic feet or 4% since 1997, but Esser expects that to recover to 1997 levels by 2005. The deepwater Gulf of Mexico will lead the rebound in U.S. gas production capacity, Esser said. He believes U.S. gas capacity has hit a low point and predicts "slight signs of a reversal by late 2000 or early 2001. "There is a substantial decline and the turnaround is going to be labored." -Paula Dittrick
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