Giant Offshore Oil Projects Return To Gulf Of Mexico

From The Wall Street Journal, "Oil Boom Returns to Gulf After Deepwater Horizon Disaster: Exxon, Shell—Even BP—Push Ahead With Giant Offshore Projects" by Daniel Gilbert, Amy Harder and Justin Scheck:

For the near term, though, the activity promises to return the Gulf to prominence as a major source of U.S. energy. In 2001, the waters produced about a quarter of all American oil and gas. Since then, production has fallen by half as wells petered out and the government issued fewer permits in the aftermath of the 2010 Deepwater Horizon explosion and oil spill. Last year, the Gulf accounted for less than 10% of the country’s energy production, in part because of soaring output from wells drilled in onshore shale formations.

The new projects here, from such companies as Hess Corp. , Exxon Mobil Corp. and Chevron Corp. , have the combined capacity to pump about 900,000 barrels a day—more than the oil and gas output of California. And that doesn’t include supplies from two projects led by BP PLC, which declined to provide details on output.

Costs here have been jumping, in part because companies are drilling farther from shore and in deeper waters. Deep-water wells are up to 25% more expensive today than in 2010, according to Shell and Chevron, and can cost $300 million each. New regulations have prompted companies to add safety features such as an extra stack of valves designed to stop an out-of-control well. The failure of such a device was a cause of the Deepwater Horizon disaster.

Source: The Wall Street Journal