7/1/2013 7:30 PM ET|
Deepwater drilling reborn in the Gulf
A mere three years after the BP disaster, the region's oil industry is booming -- and it may be just the start of a new growth cycle.
Three years ago, before BP's (BP) deadly Deepwater Horizonoil rig explosion at the Macondo exploration well in the Gulf of Mexico, analysts expected 45 rigs to be operating in the Gulf by 2013. Despite that disaster -- which killed 11 people, created the worst oil spill in U.S. history and prompted a months-long federal moratorium on deepwater oil drilling -- the Houston Business Journal recently reported that 40 rigs are currently under contract in the Gulf.
Far from becoming the dry hole for energy development that many predicted, the Gulf of Mexico is again a hot spot of new discoveries. Indeed, Gulf oil is yet another reason America is inching closer to the long-sought goal of energy independence.
A variety of factors -- including federal energy initiatives, better technology and, yes, even stricter safety regulations -- have helped Gulf oil production rebound to near pre-BP-disaster levels. Today, a wide spectrum of energy companies using deepwater semi-submersibles and drill ships are combing the Gulf for more oil to tap -- and often finding it.
"After essentially being left for dead following the devastating Macondo blowout, we believe the deepwater Gulf of Mexico is in the early stages of an extended growth cycle," analysts at International Strategy & Investment Group said in a recent investors' report that the Houston Business Journal quoted.
Oil and gas industry website Rigzone reports Shell (RDS/A) currently has the highest number of deepwater rigs under contract in the Gulf, at seven, followed by BP with six, Chevron (CVX) with five and AnadarkoPetroleum (APC) with four.
Another industry magazine, Offshore, quotes "optimistic projections" by analysts that the Gulf oil rig count could double by 2017 – with additional predictions that "oil service companies alone could see revenue from the Gulf rise from $4 billion in 2011 to $12 billion in 2015."
The U.S. Energy Information Administration says offshore oil production in the Gulf of Mexico accounts for 23% of total U.S. crude oil production.
But in a recent article in Offshore, industry experts from the research and analysis firm IHS (IHS) noted deepwater wells account for only 7% of total global conventional oil production, compared to 60% for onshore and 33% for shallow-water wells. However, only 38% of deepwater reserves are currently producing oil, while an additional 60% are in appraisal, development or discovery status.
And oil companies have made some significant new discoveries. Last November, independent Noble Energy (NBL) said it found an oil reserve in 7,200 feet of water at its Big Bend exploration prospect. And in March, Chevron announced a major oil discovery of its own.
The industry is advancing while also learning to work with the stricter, post-BP federal safety regulations. Don Van Nieuwenhuise, director of the petroleum geosciences program at the University of Houston, told the Houston Business Journal energy companies should welcome the opportunity to evaluate their operations and ensure they're safe.
"I see one side of the coin," he said. "Some in the industry say the regulations are wasting our time; the environmentalists say we need to regulate down to a drop a day. Probably, the right solution for the U.S. is in the middle."
This article is part of an MSN Money special report on America's quest for energy independence. Up next: Nuclear energy's uncertain future.
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EVERY DROP OF OIL FROM THE GULF WILL BE EXPORTED TO KEEP PRICES HIGH AND SUPER-PROFITABLE which in turn RAPES the American people for oil-baron record profit.
About 20 people are becoming super-rich from oil, AT THE EXPENSE OF OUR NATION.
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