BHP Billiton to Resume Gulf of Mexico Deep-Water Drilling After Permit Win

BHP Billiton Ltd. (BHP), the world’s biggest mining company, won the second U.S. deep-water permit since BP Plc’s oil spill last year, allowing the resumption of drilling at its Shenzi field in the Gulf of Mexico.

“We are very pleased to be resuming work,” Kelly Quirke, a spokeswoman for Melbourne-based BHP, said in an e-mailed statement yesterday. The company joins Noble Energy Inc. (NBL) as the only drillers cleared to resume work by the Bureau of Ocean Energy Management, Regulation and Enforcement since BP’s spill.

The Obama administration, which halted Gulf of Mexico drilling after BP’s Macondo well exploded on April 20, has been criticized by lawmakers for delaying domestic exploration as unrest in the Middle East pushes up oil prices.

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 during trading on March 7.

The 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 (1,524 meters) of water, before shutting the leak after 87 days.

BHP Billiton will use equipment from Helix Energy Solutions Group Inc. (HLX) in case of a blow out, Melissa Schwartz, a spokeswoman for the Bureau, said in a March 11 e-mail.

Responsible Drilling

“We are encouraging offshore exploration and production,” President Barack Obama said during a press conference at the White House March 11. “We’re just doing it responsibly.”

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, Cameron Wallace, a Helix spokesman, said at the time Noble won its permit.

Oil production in federal waters of the Gulf, the largest domestic source of U.S. crude, reached a record high in 2010, Obama said March 11. 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.

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.

To contact the reporter on this story: Robert Fenner in Melbourne at rfenner@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

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