Chevron hopeful over ban repeal
Chevron Corp. said Tuesday that it hopes to power up its quest to drill for oil in the Gulf of Mexico after the White House signaled it would lift a drilling ban at 16 sites in deep Gulf waters.
San Ramon-based Chevron and other drillers could benefit from a decision by the Obama administration to ease new environmental rules for some oil and natural gas projects in the Gulf of Mexico. The White House imposed the restrictions in the wake of last year's BP oil spill disaster.
"This is a step in the right direction," said Kurt Glaubitz, a Chevron spokesman. Still, it isn't completely certain when drilling could resume at the sites involved in the White House decision. "We still need to have clarity around the regulations and the issuance of new permits," Glaubitz said. An array of groups and politicians have criticized President Barack Obama for bringing Gulf oil drilling to a halt because of the new rules. The easing of the environmental rules affects two sites where Chevron had been drilling in the Gulf of Mexico.
At the company's Moccasin site, Chevron had almost finished drilling an exploratory well. Chevron had not drilled in that area of the Gulf previously. The second field involved in the easing of the drilling curbs is Chevron's Buckskin field. The oil giant had discovered energy supplies at that location in The company was drilling an appraisal well at Buckskin to determine the potential oil and natural gas yield of the field. "It looks like there is a sizable volume at Buckskin," Glaubitz said. A total of 13 companies will now be allowed to drill at the 16 sites. However, analysts cautioned that it isn't fully clear that drilling can resume right away. "There is still confusion about just what this announcement means," said Dan Kish, a vice president with the Institute for Energy Research. "I hope things are moving forward. But there could be a number of pitfalls involved in this process still." What's more, some drillers in the Gulf of Mexico may have curbed their appetite for drilling in the deep waters due to the uncertainty unleashed by the White House moratorium on drilling.
The Obama administration's drilling ban has erased -- at least temporarily -- about 10,000 jobs in the Gulf region. "This is hopeful for drillers like Chevron," said Robbert Van Batenburg, head of equity research for Louis Capital Markets. "But I'm not so sure how enthusiastic some of the drillers are about resuming work in the Gulf." One big reason: the high-stakes nature of exploration and drilling for oil in the ocean. The prospect of ongoing burdensome regulations issued by the White House may have made some drillers queasy. "Oil companies tend to be very risk averse," Van Batenburg said. Chevron, for example, disclosed in November that it would buy Atlas Energy Inc. in a $4.3 billion deal. That transaction would give Chevron access to nontraditional sources of energy in a Pennsylvania region that's rich in natural gas. "Domestically, Chevron is seeking to diversify," Van Batenburg said. "The natural shale gas fields Chevron would get are interesting and potentially lucrative."
Chevron has retained the oil rigs that it had been using in the Gulf at the time the moratorium was imposed, Glaubitz said. The company is undertaking maintenance on the rigs while they are idled. "The rigs are on contract with us," he said. "We are awaiting the permits to move those rigs back and finish the work that we began early in 2010 on those two wells."
Contact George Avalos at 925-977-8477.