Deepwater oil fields are a final frontier; see video

ABOARD THE CAJUN EXPRESS, Gulf of Mexico -- Five miles straight down, past the prowling barracuda and tuna, lies a massive sandstone formation marbled with oil. Extricating the inky fluid, which has lain undisturbed for millions of years, and shipping it 150 miles to land won't be easy.

But with rising global demand pushing the price of a barrel of oil near $140, securing new oil supplies from deep, distant spots such as the field code-named Tahiti is critical. That's why Chevron has leased this mobile drilling rig, which displaces more water than one of the Navy's Nimitz-class carriers, to ready for production half a dozen wells scattered across the ocean floor. The vessel's on-board thrusters hold it almost perfectly still, directly above its target, submerged in 4,000 feet of water.

"The deep water has been, and really truly is, potentially the next wave of hydrocarbons into the global energy market. It's hugely important," says Stephen Thurston, Chevron's vice president of deepwater exploration and projects.

Deepwater oil fields, those below more than 1,000 feet of water, represent one of the final frontiers of oil prospecting. The good news is that there's plenty of oil in such deposits, especially here in the Gulf of Mexico and off the coasts of Brazil and West Africa. The bad news is that much of that valuable crude lies in complex geologic formations, hidden beneath a mile or more of troublesome salt layers — meaning these new reservoirs will be costly to develop and thus will do little to eliminate $4-a-gallon gasoline.

By next year when Tahiti begins sending oil to anxious consumers ashore, Chevron expects to have invested $4.7 billion in this project. That outsized sum reflects a surge in oil field costs for raw materials, fuel and specialized gear, which have more than doubled since 2000, according to the Cambridge Energy Research Associates. The daily lease for the Cajun Express alone costs $463,000.

"The level of cost will keep (gas) prices up. It's not like we'll find something easy to produce and all of a sudden the price of gas will go back to $3," says Gary Taylor of industry publication Platts Oilgram News.

The western Gulf of Mexico represents the only United States waters where oil companies are allowed to drill. Persistently high oil prices have shaken, but not ended, the 1981 federal ban on drilling off the U.S. east and west coasts and in the eastern Gulf. President Bush on Wednesday joined likely Republican presidential nominee Sen. John McCain in reversing his support for the prohibition. Democrats remain opposed to expanded coastal drilling, saying it would threaten the environment and do little to curb high gas prices for years.