The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) will be granting one-year extensions for certain oil and gas leases in the Gulf of Mexico affected by the moratorium on deepwater drilling. To qualify for extensions, leaseholders must demonstrate that there was no oil or gas production on the lease as of May 15, 2011; that the lease is in deepwater (depths greater than 500 feet); and that the lease is scheduled to expire on or before December 31, 2015.

The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) approved three deepwater permits this past week, bringing the total of approvals to six since the deepwater drilling moratorium was lifted last October. Two of the three are designated by the agency as completely new exploration, defined as exploration drilling in a field or reservoir that has never produced. The first approval, on March 22, was ExxonMobil’s revised permit application to drill the #3 well in Keathley Canyon 919 in 6,941 feet of water.

 

The permit was the first to designate the Marine Well Containment Company (MWCC) containment system of which ExxonMobil is a member. The operator had an approved permit and had moved Seadrill semi West Sirius on location when deepwater drilling operations were suspended. On March 24, the agency approved Chevron’s revised permit to drill the #1 well in the Moccasin prospect in Keathley Canyon 736. The BOEMRE said this was the first approval for completely new deepwater exploration drilling under the new regulations. Water depth at the site is 6,730 feet. Chevron was about 80 percent of the way done with the original 29,000 foot well with Transocean drillship Discoverer Inspiration when operations were halted on ...

Noble Energy, Inc. has received an approved permit to resume drilling at the Santiago prospect in Mississippi Canyon 519 in the deepwater Gulf of Mexico. Well operations were suspended in June 2010 as a result of the deepwater drilling moratorium. Located in 6,500 feet of water, the well had been previously drilled to TD 13,585 feet at the time of the moratorium. Drilling operations are anticipated to resume in late March 2011, targeting a TD of 19,000 feet, and results are expected by end May. The Ensco 8501 rig will perform the drilling at Santiago.

Diamond Offshore has confirmed it has reached agreement with Murphy Oil to move semi Ocean Confidence to the Republic of Congo for a three-well program.  The rig will leave “immediately”, which means before the end of July.  Murphy has the rig under a four-year contract that runs through March 2012.  It is expected that Murphy will bring the rig back to the U.S. Gulf for the last year of the contract assuming it is able to secure the necessary drilling permits here.  The announcement follows on the tails of Diamond saying it will move semi Ocean Endeavor to Egypt for a contract there.  The moves are the first to occur since the fallout from the deepwater drilling moratorium was imposed.

 

Mariner Energy will pick up jackup Seahawk 2007 for a two-well plus one option well in West Cameron 110.  The rig, which had been idle due to the permitting delays, has a sidetrack and workover in the block, which should keep it busy for about 50 days.  Work will begin as soon as Mariner secures the permits, which is expected shortly.  Seahawk’s previously signed contract for the rig with Breton Energy, a one well plus two options contract, will ...

Legal wrangling over deepwater drilling in the Gulf of Mexico continues.  Most recently, the Department of Interior has imposed a suspension of drilling after a second two federal courts rejected the department’s former drilling moratorium.  The most recent suspension is directed at well control, rather than water depth, and is restricted to floating rigs that use subsea blowout preventers (BOPs).

 

Concerning the drilling suspension in the Gulf of Mexico, recently Louisiana State University’s Endowed Chair of Banking, Dr. Joseph R. Mason, estimated that the first six months of the Obama administration's moratorium on oil and natural gas exploration in the Gulf of Mexico will trigger a loss of more than 8,000 jobs, nearly $500 million in wages, and over $2.1 billion in economic activity in the Gulf region alone. 

The U.S. Court of Appeals for the Fifth Circuit in New Orleans rejected the Dept. of Interior’s request to stay the district court ruling rejecting the federal deepwater drilling moratorium last week.  The court said the Interior had failed to demonstrate a likelihood of “irreparable injury”, if the stay is not granted.    

 

This case is far from over, however.  The appeals court directed its clerk to establish an expedited schedule for the court to hear the merit of the government's appeal of the district court's preliminary injunction in the case.  A hearing will be scheduled during the week of August 30. The court also said the government has a right to apply for emergency relief if it can show that drilling activity by deepwater rigs has commenced or is about to commence.  Furthermore, the court also ruled that Interior Secretary Salazar did not show the court that there is any likelihood that drilling activities will be resumed pending appeal.                                                                      

 

Texas Congressmen Pete Olson, R-Sugar Land, and Kevin Brady, R-The Woodlands, promised to fight the Gulf of Mexico drilling moratorium, rallying nearly 300 at a July 7 town hall meeting called by the International Association of Drilling Contractors.