IEA Says Drilling Requests for Gulf of Mexico Are Picking Up

Drilling requests for the Gulf of Mexico are picking up after the moratorium was lifted by U.S. President Barack Obama a month ago, the International Energy Agency said.

“Oil companies are queuing up to submit requests to recommence drilling, including many of those previously active in the area,” the IEA said in a report today. “Companies remain keen to work in the Gulf of Mexico, seeing it as one of the more profitable regions accessible to them.”

Obama halted oil and natural-gas drilling in waters deeper than 500 feet (152 meters) after BP’s Macondo well blew out April 20, killing 11 workers and setting off the biggest U.S. oil spill. The new rules will add $183 million a year to the cost of drilling on the Outer Continental Shelf, the Interior Department said in a notice Oct. 14 in the Federal Register.

The rules will add $1.42 million in costs for each new deep-water well that uses a floating rig, the department said. Shallow-water wells will cost an extra $90,000.

Oil production in the Gulf of Mexico for 2010 will be 60,000 barrels of oil equivalent a day and 100,000 barrels of oil equivalent a day in 2011, lower than earlier forecast, the IEA said. The first permits could be granted before the end of the year and the question remains what this will mean for production volumes, the Paris-based agency said.

The rules are aimed at tightening workplace safety on offshore rigs and beefing up standards for equipment. Chief executive officers will have to certify that their companies comply with the regulations.

Blowout Preventers

Drillers also provide third-party verification that blowout preventers, devices designed to cut off oil flow in a leak, are properly designed and can stand up to pressure under all conditions. A blowout preventer failed in the BP spill.

Chevron Corp., the second-largest U.S. energy company, Oct. 21 approved a $7.5 billion plan to develop oil and gas fields in the Gulf. Royal Dutch Shell Plc, Europe’s biggest oil company, expects to pump 220,000 barrels of oil a day next year in the Gulf and plans to produce more than 250,000 barrels of oil equivalent a day from the region, it said without giving a time frame.

To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.