Against backdrop of gulf spill, other nations move forward with deep-water drilling
Tuesday, July 20, 2010; 12:27 PM
NY-ALESUND, NORWAY -- Few if any nations have paid as much attention to the safety of offshore drilling as this one, surrounded as it is by oil-rich seas on all but its eastern border.
In 40 years of offshore energy exploration, Norway has suffered just four spills -- none of the magnitude of the one in the Gulf of Mexico and none reaching the country's pristine tundra shores. Its government has made efforts to avoid the kinds of conflicts that have bedeviled the U.S. regulatory process by splitting off safety and environmental oversight duties from the Ministry of Petroleum and Energy. Perhaps most significantly, the country has a separate Climate and Pollution Agency that weighs in on every decision about whether to open up new areas to offshore drilling and has inspectors who examine rigs once they're operating.
But even as the ongoing underwater drama in the Gulf of Mexico reveals the oil industry's shortcomings when it comes to preventing or stopping the flow of an underwater geyser, Norway is pushing ahead with offshore drilling plans, including the kind of deep-water drilling that the Obama administration has suspended in the United States.
"Easy oil is running out," said Hege Marie Norheim, head of Statoil's Strategic Agenda of Arctic and Subarctic Business Development Activities. "We've been exploring for oil and gas where it lies."
That has risky implications if an accident does happen, as the BP spill highlights: "No company in Norway would have a better strategy to stop the spill," said Frederic Hauge, president of the Norwegian environmental group Bellona.
The strategy of continuing to exploit the economic opportunities of deep-water wells even as the hazards they represent becomes clearer is being pursued the world over. Other countries -- including Brazil, Canada, Nigeria and Angola -- are also moving forward with drilling, lured by oil reservoirs they are discovering that are two to six times as big as the average Gulf of Mexico reservoir and taking advantage of new opportunities offered by the U.S. moratorium.
"For places like Angola, Nigeria and Brazil, most of their production comes from the deep water," said Leta Smith, director of exploration and production trends at Cambridge Energy Research Associates. "It's a big piece of their revenue stream."
Some of those countries stand to gain from the uncertainties in the United States prompted by the disaster in the gulf. This month, Diamond Offshore Drilling announced that it is sending one of its deep-water drilling rigs from the Gulf of Mexico to Egypt. The rig, which can work in water up to 10,000 feet deep, has a new contract running at least through June 2011. On Monday, Diamond said another Gulf of Mexico rig called the Ocean Confidence would depart for Congo.
Diamond said it might move more of its three remaining Gulf of Mexico rigs to foreign countries. While apologizing for the loss of jobs in the United States, Diamond chief executive Larry Dickerson said, "We are actively seeking international opportunities to keep our rigs fully employed."
There are many such opportunities. Brazil, already home to much of the world's deep-water drilling fleet, is signing up more rigs. It is drilling wells nearly five miles underwater -- five times deeper than BP's Macondo well -- and nearly 200 miles offshore, at the edge of its national waters. The political debate over the area known as the "pre-salt" province has focused on how to divvy up the royalties from such lucrative wells, not whether to curtail exploration and development.
Libya also said last month that it would continue its offshore drilling program and gave BP a green light to go ahead with new exploration wells. BP spokesman Andrew Gowers said that the Libyan government "would have had the opportunity to put [BP offshore exploration plans] on hold, and they decided to proceed and were very public about it."
Countries are making long-term plans as well. Last week, Canada invited new bids on nine-year leases off the coast of Newfoundland and Labrador.