Wednesday, January 4, 2012

Deepwater Drilling Thriving in Gulf after BP Spill by Jonathan Fahey ASSOCIATED PRESS


— Two hundred miles off the Texas coast, ribbons of pipe are reaching for oil and natural gas deeper below the ocean's surface than ever before.

These pipes, which run nearly 2 miles deep, are connected to a floating platform so remote that Shell named it Perdido, which means "lost" in Spanish. What attracted Shell to this location is a geologic formation, found throughout the Gulf of Mexico, that might contain enough oil to satisfy U.S. demand for two years.

Though Perdido is isolated, it isn't alone. Across the Gulf, companies are probing dozens of new deep-water fields, thanks to high oil prices and technological advances that make it possible to tap them.

The newfound oil won't do much to lower oil prices. But — along with increased production from onshore U.S. fields and slowing domestic demand for gasoline — it could help reduce U.S. oil imports by more than half during the next decade.

Eighteen months ago, such a flurry of Gulf activity seemed unlikely. The Obama administration halted drilling and stopped issuing new permits after the explosion of a BP well killed 11 workers and caused a massive oil spill.

But the moratorium was lifted, and the Obama administration issued the first new drilling permit in March. Now the Gulf is humming again, and oil executives say it's the world's best place to drill.

"In the short term and the medium term, it's clearly the Gulf of Mexico," said Matthais Bichsel, a Royal Dutch Shell PLC board member who is in charge of the company's new projects and technology.

By early 2012, there will be more rigs in the Gulf to drill in "deep water" — defined as 2,000 feet or deeper — than before the BP spill.

In November, Perdido began pumping oil from a field called Tobago; the well begins 9,627 feet below the Gulf's surface. No other well on Earth produces oil in deeper water, and that's about as deep as the Gulf gets. For drillers, that means the entire Gulf is now within reach.

"We are at the point where ... depth is not the primary issue anymore," said Marvin Odum, head of Royal Dutch Shell's drilling unit in the Americas. "I do not worry that there is something in the Gulf that we cannot develop ... if we can find it."


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