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Oil Drillers Turn to Shipwreck Hunters Under Tighter U.S. Rules

This side-scan sonar image show the German U-boat U-166.
Photographer: C&C Technologies, Inc. via NOAA
This side-scan sonar image show the German U-boat U-166. Photographer: C&C Technologies, Inc. via NOAA

June 15 (Bloomberg) -- A German submarine from World War II and a two-masted schooner that sank in the early 1800s are among finds made by C&C Technologies Inc. in the Gulf of Mexico.

Now the company that specializes in hunting for shipwrecks says it’s getting more orders from oil companies pressed by U.S. regulators to find out whether a sunken tanker or a French colonial vessel rests in the deep waters where they want to drill.

“We’ve already seen an uptick in the business,” Jay Northcutt, geophysical manager for Lafayette, Louisiana-based C&C, said in an interview. “A shipwreck can be found anywhere.”

Oil companies say the surveys add to the burden of costs and bureaucracy under expanded regulation that followed the blowout last year of BP Plc’s Macondo well in the Gulf.

“It could slow down planned approval and permitting,” Erik Milito, upstream and industry operations director at the American Petroleum Institute, a Washington-based trade group, said in an interview. “Some of these surveys could be a million dollars to run, and there might be no need to do that based upon the unlikelihood of a shipwreck being there.”

A shipwreck search can cost $300,000 to $1.5 million, according to closely held C&C.

The Bureau of Ocean Energy Management, Regulation and Enforcement, the government’s drilling regulator, informed oil companies of a “new requirement through an e-mail, as opposed to using the public notice and comment process,” Milito said.

That’s not true, according to the bureau, which said in a statement yesterday that the e-mail to the industry in March was a reminder of a longstanding historic preservation requirement that’s being enforced once again.

‘Categorical Exclusions’

The archeological surveys are being demanded as part of full environmental assessments, Michael Bromwich, the chief drilling regulator, said when asked about the policy at a June 2 hearing of the House Oversight and Government Reform Committee. The bureau is no longer granting oil and gas companies “categorical exclusions” from the environmental studies, as it had done before the BP spill, he said.

An operator that finds “any archaeological resource” should halt operations and notify the Bureau of Ocean Energy Management, according to the bureau’s website. Companies have made changes in their plans to protect historic vessels.

C&C was hired by BP and Royal Dutch Shell Plc to check the route for a subsea natural-gas pipeline, according to the company. In 2001, its remote-controlled underwater vehicle found the U-166, a German submarine that sank the S.S. Robert E. Lee, a U.S. passenger ship, in 1942, killing 25 people.

BP, based in London, and Shell of The Hague diverted the pipeline to avoid the wreck and sponsored initial research on it.

Still on Sea Floor

The vessel, equipped with 20- and 37-millimeter anti-aircraft guns and a cannon, remains on the sea floor, about 45 miles from the mouth of the Mississippi River, Rob Church, senior marine archaeologist for C&C, said in an interview.

Also in 2001, Exxon Mobil Corp. of Irving, Texas, the world’s largest oil company, found a 200-year-old wreck in 2,600 feet (792 meters) of water when building a pipeline 30 miles off the mouth of the Mississippi River, the Bureau of Ocean Energy Management said in a statement on its website.

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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