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Shell Wins Approval for Deep-Water Exploration Plan in Gulf

Shell Wins Approval for Deep-Water Exploration
Semi-subermisible oil rigs and jackup shallow-water drilling units stand idle in the Gulf of Mexico. Photographer: Aaron M. Sprecher/Bloomberg

March 21 (Bloomberg) -- Royal Dutch Shell Plc won approval for deep-water exploration in the Gulf of Mexico, the first plan cleared by U.S. regulators since the BP Plc oil spill.

“This exploration plan meets the new standards for environmental review and marks another important step toward safer deep-water exploration,” Interior Secretary Ken Salazar said today in an e-mailed statement. “I am confident that other operators can satisfy the same standards.”

Shell, based in The Hague, is seeking to drill in about 2,950 feet (899 meters) of water, 130 miles off the Louisiana coast, according to the Interior Department’s statement. The company still needs drilling permits, a step that follows approval of the exploration plan.

Shell is the first to get clearance for a plan, which may result in drilling three new wells in the Cardamom field. The regulator previously allowed Noble Energy Inc., BHP Billiton Ltd. and ATP Oil & Gas Corp. to resume work on wells on which work was suspended after BP’s April 20 spill.

The exploration plan estimates the well would spew as much as 143,000 barrels on the first day after an uncontrolled blowout, more than double the daily average in BP’s spill. Stopping the flow would take 109 days, if the company used a relief well.

BP’s well spewed as much as 62,000 barrels a day after the April 20 blowout, and gushed for 87 days.

Shell will use equipment from Marine Well Containment Co., a group the company set up with three partners, in case of a blowout, according to the exploration plan.

Containment Plans

Marine Well Containment was established by Shell, Exxon Mobil Corp., ConocoPhillips and Chevron Corp. after the BP spill to enable the companies to contain oil discharged during similar disasters in the future.

“This reflects Shell’s robust and comprehensive approach to responsible offshore development,” Shell said today in an e-mailed statement.

Shell’s American depositary receipts, each representing two class “A” ordinary shares, rose $1, or 1.4 percent, to $70.87 at 4:15 p.m. in New York Stock Exchange composite trading. The company had climbed 21 percent in the past year in New York trading.

-- with assistance from Joe Carroll in Chicago, Jim Polson in New York. Editors: Steve Geimann, Joe Winski

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

To contact the editor responsible for this story: Steve Geimann at sgeimann@bloomberg.net

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