March 2, 2011 1:33 am

Well award puts BP back in Gulf of Mexico

BP is the largest shareholder in the first deep water exploration well to be given the go-ahead in the US since the Deepwater Horizon disaster last year, showing how the company could have a future in the Gulf of Mexico even after last year’s spill.

The details of the project emerged as the oil industry lobby group described the permit award as “not enough” and urged the US government to move faster.

The Bureau of Ocean Energy Management, Regulation and Enforcement on Monday approved a permit for Houston-based Noble Energy to resume work on the Santiago well in the Gulf of Mexico, which was under way last year but stopped when the Obama administration imposed a moratorium on deep water drilling in May.

Noble is the operator, meaning it is in charge of day-to-day decisions about the well, but it owns just 23.25 per cent of the project. BP has the biggest stake, with 46.5 per cent.

Michael Bromwich, the director of the BOEMRE, did not mention BP’s involvement when he announced the permit award on Monday, saying that Noble had “successfully demonstrated that it can drill its deep water well safely and that it is capable of containing a subsea blow-out if it were to occur.”

Noble has a contract for spill response with a group led by Helix Energy Solutions Group, an oil services company that helped develop the equipment that was eventually successful in sealing BP’s Macondo well last year.

By acting as a non-operating partner, BP has been able within a year of the disaster to restart its development in the gulf, where it holds more leases than any other company, and has two large discoveries to develop and more prospects to explore.

Bob Dudley, chief executive, said last month that BP hoped to have five rigs resuming activity in the region this year, but pointed out that it also had stakes in several projects operated by other companies.

He added: “One of the key uncertainties we face in 2011 is the pace at which activity and getting back to work will be restored in the Gulf of Mexico. We are not unique: the industry faces a similar uncertainty.”

The oil and gas industry association continued to press for regulators to issue new deep water drilling permits more rapidly.

Jack Gerard, president of the American Petroleum Institute, said: “While every permit is welcome news, tightening the screws on domestic oil and natural gas production during a time of increased demand and global uncertainty is a formula for disaster.”

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