Drilling permits up as Gulf trends toward bigger, deeper facilities

11 01, 2012 by Fuel Fix

Two years after the blowout of BP’s Macondo well killed 11 workers, unleashed the nation’s worst environmental disaster and triggered a five-month halt on much offshore oil drilling, that activity has rebounded in the Gulf of Mexico, according to a report issued Wednesday.

The analysis by Quest Offshore concludes that the pace of government approvals of Gulf drilling permits has been climbing over the past six months and now is back to pre-Macondo levels. According to the research firm, the Interior Department signed off on 78 new exploration drilling permits and 36 new development drilling permits over the past year.

But that data also reflects a change in the Gulf, where energy companies are increasingly drilling more wells from a single facility. A surge in permits to drill wells at existing fields — rather than true wildcat exploration permits — are behind the increase, Quest said.

Projects with five or more wells “have seen a record permitting pace since late 2011,” Quest notes.

For instance, Chevron may ultimately use dozens of wells tied back to a single production facility to tap its Jack and St. Malo fields about 280 miles south of New Orleans. Shell is using numerous wells at its Mars platform to glean oil from that field.

More and more larger production facilities — erected by major oil companies or the biggest independent firms in increasingly challenging fields — are dotting the Gulf of Mexico, Quest analysts note. The result could mean changes for the oilfield service firms and other contractors that compete for business at sea, with fewer — but bigger — contracts up for grab.