Oil Industry Narrows Focus On Deep Water

By ALAN SAYRE

NEW ORLEANS (AP) — Leaders of several energy-related companies avoided talk about a rebound in oil prices Monday and suggested it could be a long, slow recovery even as the search in deep waters goes on.

Companies in all aspects of energy production likely will be dealing with tighter budgets well into 2010 as supplies of oil and natural gas exceed demand.

"We think recovery is going to be modest over a long period of time," ConocoPhillips CEO Jim Mulva said during a presentation to investment analysts at the Howard Weil Energy Conference.

The number of fringe projects are in decline as producers and service companies focus their attention and money on deepwater drilling, which requires hundreds of millions of dollars to develop — and are based upon long-term projections of where supply and demand are going.

"Deepwater is going to be where it is," said Pete Miller, CEO of Houston-based National Oilwell Varco Inc., which builds and maintains drilling rigs.

At last week's sale of federal offshore leases off the coasts of Louisiana, Mississippi and Alabama, the heart of the Gulf of Mexico's deepwater industry, high bids dropped 80 percent to $703 million from 2008's record sale of $3.67 billion.