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BHP Billiton Wins U.S. Deep-Water Drilling Permit as Oil Surges

BHP Billiton Ltd. (BHP) won the second U.S. deep-water permit to drill in the Gulf of Mexico since BP Plc (BP/)’s oil spill last year, after lawmakers criticized the Obama administration for delaying domestic exploration.

BHP will be able to resume work halted after BP’s disaster on April 20. The Melbourne-based company, Australia’s biggest oil and gas producer, will use equipment from Helix Energy Solutions Group Inc. (HLX) in case of a blow out, Melissa Schwartz, a spokeswoman for the Bureau of Ocean Energy Management, Regulation and Enforcement, said yesterday in an e-mail.

Noble Energy Inc. (NBL) won the first deep-water drilling permit in the Gulf on Feb. 28. Rising oil prices following political unrest in North Africa and the Middle East intensified calls from Republicans in Congress and oil companies to let energy producers resume work in the region.

“We are encouraging offshore exploration and production,” President Barack Obama said during a press conference at the White House yesterday. “We’re just doing it responsibly.”

Crude oil in New York has climbed 23 percent in the past year. Futures have surged 11 percent since Jan. 14, when the president of Tunisia was ousted as protests rocked the Middle East and North Africa, including Saudi Arabia’s neighbors Yemen, Oman and Bahrain. Prices touched a 29-month high of $106.95 a barrel in during trading on March 7.

Helix, which provided vessels that responded to the BP disaster, is able to collect 10,000 barrels of oil a day and cap a well in water as deep as 5,600 feet (1,706 meters), Cameron Wallace, a Helix spokesman, said at the time Noble won its permit.

‘Working Together’

“This second permit approval is another example of regulators and industry working together to restore domestic energy production in the Gulf of Mexico in a responsible manner,” Wallace said in a statement yesterday.

Oil production in federal waters of the Gulf, the largest domestic source of U.S. crude, reached a record high in 2010, Obama said yesterday. The administration had stopped deep-water drilling after the BP blow out to assess safety and spill- response plans of the companies. The moratorium was lifted on Oct. 12.

Producing oil is a time-consuming process and the administration should issue more permits and open new areas for energy exploration, Erik Milito, director of upstream and industry operations at the American Petroleum Institute, a Washington-based trade association, said during a conference call with reporters yesterday.

Kelly Quirke, a spokeswoman for BHP Billiton, didn’t respond to an e-mail and voicemail message left on her mobile phone outside of normal office hours.

‘Major Constraint’

BHP said on Feb. 15 that the lack of permits in the Gulf “was a major constraint on our business” and resulted in deferring “drilling of high volume production wells.”

Production for the 2011 financial year will be in line with the 2010 financial year, the company said in a statement.

BP’s Macondo well blew out off the Louisiana coast, killing 11 rig workers and spewing more than 4 million barrels of crude into the sea. BP made several attempts to cap the well, located in 5,000 feet of water, before shutting the leak after 87 days.

To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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