Chevron won approval today to continue drilling an exploratory well in the Gulf of Mexico — the first deep-water wildcat to be permitted since last year’s oil spill.
Under a permit issued by the Bureau of Ocean Energy Management, Regulation and Enforcement, Chevron will be allowed to drill a new well in a previously untapped reservoir in the Gulf of Mexico.
Although it is the fifth deep-water drilling project to be permitted since the Obama administration lifted a ban on that work last October, Chevron’s well would be the first in an unknown reservoir where oil or gas has not been produced.
The other permits — all issued in the past four weeks — have gone to projects where wells have already been drilled and discoveries have been made.
Here, Chevron is drilling an exploratory well in 6,750 feet of water at its Moccasin project in hopes of discovering oil and gas. The company is effectively making a $1 million-per-day gamble that it will discover oil at the site.
The company first began drilling the well last March, a month before the blowout at BP’s Macondo well. Drilling was suspended on June 9.
The project is located in Keathley Canyon Block 736, approximately 216 miles off the Louisiana coastline and 190 miles southeast of Houston.
Michael Bromwich, the bureau director, said the permit approval “further demonstrates industry’s ability to meet and satisfy the enhanced safety requirements associated with deep-water drilling, including the capability to contain a deep-water loss of well control and blowout.”
The permit could amplify concerns about the reliability and strength of emergency devices known as blowout preventers, following a report Wednesday on the one used at BP’s doomed well in the Gulf. A four-month investigation of that blowout preventer revealed that it was unable to successfully shear through drill pipe and seal oil and gas underground because that pipe had buckled and shifted off center.
Offshore drilling advocates cheered the permit approval. Randall Luthi, president of the National Ocean Industries Association, said that while all of the deep-water permits issued to date are good news, “today’s approval of a permit for truly new deep-water exploration in the Gulf of Mexico is particularly noteworthy and is a milestone we have been awaiting.”
“We are encouraged that the backlog of permit applications is slowly growing smaller, and that some of our member companies who were sidelined for the past year will soon get back to work in the Gulf,” Luthi added.
The ocean energy bureau has focused on restarting 57 deep-water drilling projects that were approved before last year’s spill, including 16 where drilling had begun. Those previously permitted projects have been grandfathered from undergoing environmental assessments that will be done on all new deep-water drilling proposed since last year’s spill.
To win the permit, Chevron had to prove to regulators it could swiftly control any blowout at the site and trap gushing crude. The company said it would rely on the marine capping stack and other equipment provided by the Marine Well Containment Company in case of a sub-sea blowout.
Chevron joined three other major oil companies — Exxon Mobil, Shell and ConocoPhillips — to form the MWCC after last year’s spill. BP, Apache Corp. and Anadarko Petroleum Corp. have since joined the containment company.
If you’re keeping score, here are the permits that have been issued so far for offshore exploration projects that were blocked by last year’s ban on some deep-water drilling:
- Feb. 28: Noble Energy secured a permit to drill a bypass well in its Santiago prospect about 70 miles southeast of Venice, La. (This is Mississippi Canyon Block 519).
- March 11: BHP Billiton Petroleum secured a permit to drill in its Shenzi Field, 120 miles from the nearest Louisiana shoreline. (This is well SB 201 on Green Canyon Block 653).
- March 18: ATP Oil & Gas secured a permit to finish drilling a well at its Telemark Hub about 90 miles south of Venice, La. (This is well no. 4 in Mississippi Canyon Block 941).
- March 22: Exxon Mobil secured a permit to drill a new well in its Hadrian North field about 240 miles from the Louisiana coast. (This is Keathley Canyon Block 919).