Tags: Deepwater | Rigs | Gulf | Mexico

Return of Deepwater Rigs Bodes Well for Growth in Gulf of Mexico

Thursday, 04 Jul 2013 03:00 PM

By John Morgan

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Deepwater drilling has made a strong comeback in the Gulf of Mexico only three years after the BP disaster, and it may be the start of a new energy growth cycle there, according to MSN Money.

Instead of becoming a drilling wasteland following the BP disaster that created the worst oil spill in U.S. history, Gulf exploration and production apparently is now one of the reasons the nation is moving toward energy independence.

The Houston Business Journal reported recently 40 rigs are under contract in the Gulf – only five less than were predicted for 2013 before the BP’s Deepwater Horizon oil rig disaster – and the count could double by 2017.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

“After essentially being left for dead following the devastating (BP) blowout, we believe the deepwater Gulf of Mexico is in the early stages of an extended growth cycle,” a report from the International Strategy & Investment Group LLC said. Those analysts predicted the Gulf of Mexico may be the strongest offshore market in the world through 2015.

Ian Macpherson, an analyst in the Houston office of Simmons & Company International, said the Gulf is back to the threshold of where it was before the disaster because of a combination of improved exploration techniques, recovery and the general predictability of operating in the Gulf.

MSN said energy companies are now using semi-submersible and drill ships to comb the Gulf for more oil, and they are often finding it. Both Noble Energy and Chevron have announced recent major oil discoveries in the Gulf.

Offshore magazine quoted “optimistic projections” by analysts that “oil service companies
alone could see revenue from the Gulf rise from $4 billion in 2011 to $12 billion by 2015,” MSN reported.

The U.S. Energy Information Administration estimated offshore oil production in the Gulf
accounts for 23 percent of total U.S. crude oil production.

Don Van Nieuwenhuise, director of the petroleum geosciences program at the University of Houston, said oil companies should welcome tighter environmental regulations in the wake of the BP Deepwater Horizon tragedy because it force them to operate more safely.

“I see on one side of the coin, some in the industry say the regulations are wasting our time; the environmentalists say we need to regulate down to a drop a day. Probably, the right solution for the U.S. is in the middle,” he said.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

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