Deepwater Horizon’s sinking could scupper US drilling plans

Martyn Wingrove – LLOYD’S LIST

THE sinking of the Transocean’s semi-submersible rig Deepwater Horizon last week will weaken the US administration’s attempts to open up the Atlantic seaboard for oil and gas drilling.

The oil pollution coming from the blown subsea wellhead is creating not just a physical scar on the environment but also a psychological one in the minds of the US public, which could scupper any plans for expanding the areas allocated for drilling.

Last month, US President Barack Obama unveiled plans to open up areas off Virginia, Alaska and Florida to drilling rigs and seismic survey ships from as early as 2012 as part of a broader energy package.

His plans were based on those proposed by his predecessor George Bush and need to go through Congress and in the Senate before they can be enacted.

But the oil slick from the rig disaster in the Mississippi Canyon area will make the path of the energy bill even tougher, delaying the leasing of new exploration areas by the Department of the Interior’s Minerals Management Service.

“It will definitely ratchet up the debate on offshore drilling. But at this point the administration looks pretty committed to opening up the eastern coast,” said Judson Bailey, an analyst with Houston-based Jefferies & Co.

Oil companies can only drill in the US Gulf, except off Florida, in limited areas off Alaska and only from existing platforms off California.

They have been calling for new areas to be opened off Virginia and Florida to drilling rigs as a way for the US to eventually reduce the amount of oil and gas it imports.

The sinking of Deepwater Horizon and loss of 11 oil workers will also bring into question the safety of exploration drilling in what was though to be a region of good health and safety management.

The focus will tomorrow turn to British oil major BP, which hired the drilling semi-submersible. It will come under pressure from investors and the media to explain how the explosion occurred on the rig as it reports first quarter profits.

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