Gulf of Mexico drilling and development activities start to heat up

It’s been more than a year since the Deepwater Horizon accident and ensuing Macondo oil spill in the US Gulf of Mexico, but the region is just now starting to pick back up.

As the MMS transformed itself into the BOEMRE and instituted stricter deepwater drilling regulations, industry innovators got to work developing two new deepwater containment systems, which allow the industry to move forward with drilling a year later.

Since BOEMRE began issuing drilling permits, more than 10 have been granted to super-majors and independents focused on the safe exploration and development of the Gulf waters.

Today, US independent ATP Oil & Gas (NASDAQ:ATPG) revealed that the company had completed the drilling phase of the first well to get started post Macondo (MC 941 A-2) in the deepwaters of the Mississippi Canyon.

Additionally, other operators are drilling ahead a multiple deepwater locales in the US Gulf of Mexico.

Further strengthening the region's comeback, a number of major projects have been sanctioned in the US Gulf of Mexico recently.

Namely, Chevron (NYSE:CVX) sanctioned the $4 billion Big Foot development and moved forward with the ultra-deepwater Jack-St. Malo development, underscoring the super-major’s commitment to the Gulf of Mexico.

Furthermore, the company has begun appraisal drilling at its Buckskin oil field in the Keathley Canyon offshore Texas.

Announced this week, Hess Corp. (NYSE:HES) chose Williams Partners’ (NYSE:WPZ) spar technology for the development of its ultra-deepwater Tubular Bells oil and natural gas field. The hull for the Gulfstar FPS has already been awarded to Gulf Island Fabricators, and the topsides is will soon be awarded to an unnamed local fabricator, making the floating production facility the first spar to be built entirely in the US Gulf Coast Region.

On the Mexican side of the Gulf, Pemex reported this week a deepwater natural gas and condensate discovery with its Piklis-1 exploration well nearly 150 kilometers from the port of Coatzacoalcos. The deepest well to date for the state-run firm, Pilkis-1 was drilled by the Centenario semisub.

Tests on the Mexican deepwater well point to up to 600 billion cubic feet of natural gas reserves in the field.

Adding to activity in the Gulf, Pemex has also awarded a subsidiary of McDermott International (NYSE:MDR) the contract to build three new subsea pipelines in the Bay of Campeche.

Even drilling-averse President Obama has called for increased production from the waters offshore the US, including the Gulf of Mexico, Chukchi Sea and Mid-Atlantic, which should help to further increase drilling and development in the nation.

...................................................

Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Obama shifts focus to oil firms to deflect attention from his 'failed energy policy' - API's Jack Gerard

Coinciding with rising gasoline and oil prices, multiple amendments are proposed on Capitol Hill to increase taxes for oil and gas companies working in the United States.

A non-profit representing domestic oil and gas producers, the American Petroleum Institute (API) contends that taxing oil firms will negatively affect the American public by both limiting domestic hydrocarbon production and stressing individual investments.

"The president's proposal hurts domestic oil and gas production; it discourages the very investment we're trying to create to create new jobs in the United States and to produce more energy," said Jack Gerard in an exclusive interview with PennEnergy.com on the OTC show floor.

The executive stressed that the majority of domestic oil and gas is owned by everyday Americans.

"Corporate management in the oil and gas industry owns less than 2 percent of the oil and gas industry. The bulk of the oil and gas industry is owned by pension plans, it's owned by 401K plans, it's owned by mutual funds," Gerard said.

In a recently released study, the API contents that the people who actually own oil and gas, via these investments, are firefighters, teachers and everyday Americans.

"It's very inappropriate to now move in and begin to take away their hard-earned earnings merely because the president is trying to take attention away from a failed energy policy; so he wants to punish the industry," Gerard contends.

With the first handful of deepwater drilling permits in hand since the Deepwater Horizon accident, rigs are expected to get to work again soon. Nonetheless, exploration and development drilling in the US Gulf of Mexico's deepwater has been at a stand-still since the moratorium.

"Today, unfortunately, we are down in terms of production from where we were before," Gerard said. "The administration, the US government needs to focus on what it's going to take to bring us back to pre-spill levels - and then beyond that – to meet the demands in this country."

Calling the drilling moratorium "unnecessary," Gerard stressed that more than 42,000 oil and gas wells have been drilled in the US Gulf of Mexico, and "we understand that process."

"If we want to be energy secure, we can produce more oil and natural gas here in the United States," he said.

Watch PennEnergy's video interview with API CEO Jack Gerard.

............................
Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.