BOEMRE Approves First Deepwater Drilling Permit since Accident

by Nick Snow, OGJ, Feb 28, 2011
The US Bureau of Ocean Energy Management, Regulation, and Enforcement [the former Minerals Management Service] approved the first deepwater drilling permit on Feb. 28 since the Macondo well accident and crude oil spill. BOEMRE said Noble Energy Inc.�s application for a permit to bypass was for Well No. 2 in Mississippi Canyon Block 519 about 70 miles southeast of Venice, La.

The permit represents a significant milestone for both the US Department of the Interior agency and the oil and gas industry since Interior Sec. Ken Salazar placed a moratorium on new deepwater drilling following the [BP's Macondo] well blowout and explosion which took 11 lives [please see my post here -- D.R.], BOEMRE Director Michael R. Bromwich said. [The moratorium was subsequently lifted in October 2010, but the department/agency has yet to approve any new deepwater exploration drilling permits. -- D.R.]

�This permit was issued for one simple reason: The operator successfully demonstrated that it can drill its deepwater well safely and that it is capable of containing a subsea blowout if it were to occur,� Bromwich told reporters during a teleconference. �We expect further deepwater permits to be approved in coming weeks and months based on the same process that led to the approval of this permit.�

In Houston, Noble Energy said it received permission to resume drilling its Santiago prospect in the deepwater Gulf of Mexico, which it described as a middle Miocene amplitude prospect in 6,500 ft of water where the independent producer is operator and holds a 23.25% working interest. The well was drilled to a 13,585 ft depth when operations were suspended on June 12, and Noble Energy said it expects to resume work in late March to a 19,000 ft targeted drilling depth, with results anticipated by the end of May.

David L. Stover, the company�s chief executive, said Noble Energy worked over several months with other operators and service providers to make deepwater drilling operations safer, including implementing third-party certification of well designs and blowout preventer testing.

Coordinated with BOEMRE

�Our partnership with others in the Helix Well Containment Group has increased the deepwater Gulf subsea control and containment capabilities,� he said. �The industry has improved its ability to respond to surface spills as well. Our teams have done an outstanding job of coordinating with the BOEMRE on these matters�. Noble Energy is proud to help lead the industry back to drilling in the deepwater gulf.�

Bromwich emphasized that no politics were involved in approving Noble Energy�s application, which he said had been working its way toward approval for several weeks. He noted that Helix Group has said that its system works to depths of 5,600 ft, but added that Noble Energy complemented that with additions which BOEMRE determined would effectively contain a blowout from 6,500 ft. The agency also has held several meetings with the Marine Well Containment Co., the group formed by four multinational oil companies operating in the gulf, and will approve that system if a producer demonstrates that it will work, he said.

�We are taking these applications to drill as they come in. Right now, a very small number are pending,� Bromwich said. �I expect industry has been waiting for a signal that deepwater drilling would be allowed to resume, and this could be the signal. I have no way of knowing how long it will take to approve the next one. It involves careful analysis of each application. Given the rigorous safety requirements, the public can be confident that the approved wells will be safe.�

Oil and gas industry trade associations welcomed the news. �The actual issuance of a permit for new deepwater drilling is long awaited and an important step forward in the wise development of energy off our shores,� said National Ocean Industries Association Pres. Randall B. Luthi. �With all the world-complicating factors, including rising oil prices, political turmoil in the Middle East, and the loss of jobs in the Gulf of Mexico, this decision offers hope that the United States is getting back in the energy and jobs market.�

He said taking DOI at its word that approval of Noble Energy�s application is not simply a token gesture, the action �sends a calming signal to operators, producers and service companies that the long drought is just about over,� adding, �It is also a compliment to Director Bromwich and a testament to the efforts of many within industry that the containment and safety issues can be resolved when industry and BOEMRE work together.� [Full story]

(For information on Noble Energy, in general, and its operations offshore Israel, specifically, please see my post here. Also, please read my post "National Commission Releases Final Report on Deepwater Horizon Oil Spill and the Future of Offshore Drilling," here. -- D.R.)