In the depths of the ocean off the coast of Uruguay, more than two miles below sea level, the oil industry is continuing to push back the frontier.  Last month a drillship operated by AP Møller-Maersk of Denmark began the Raya 1 well in 3,411 metres of water, breaking the record for sea depth previously set in 2013.  Drilling in such extreme conditions is a remarkable feat, but wells such as Raya 1 are becoming increasingly rare. Technology makes them possible, but economics militates against them.  For the companies that operate offshore rigs on behalf of oil producers — including Transocean, Seadrill, Ensco and Noble Corp — the slump in crude prices since the summer of 2014 has been brutal. They have been reporting large losses, and have cut or scrapped their dividends. Their share prices have plunged.

The impact of low oil prices is often depicted as a battle between Saudi Arabia and the onshore shale producers of the US. But other relatively high-cost sources of supply around the world have also been hit, and for offshore oil the effect is likely to last longer.  The latest data for offshore oil and gas production still look healthy. Last year output from the UK sector of the North Sea rose 7 to 8 per cent, while crude production in the US waters of the Gulf of Mexico rose 10 per cent.

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