Chevron makes deep water investment in Gulf
Image via WikipediaChevron Corp. on Thursday gave another multibillion-dollar vote of confidence to the future of oil and gas activity in the deep-water Gulf of Mexico.Despite the large investment by Chevron, the administrations attempt to strangle domestic production is limiting the recovery in the Gulf in the coming years. This should be a huge political issue in the 2012 election. If Obama is not defeated the US will be importing more oil and gas from places where people do not have our interest at heart.
Despite lingering regulatory uncertainty in the U.S. offshore region created by the BP oil spill, the nation's second-largest oil company after Exxon Mobil said it will spend $4 billion over the next several years to develop its Big Foot field, 225 miles south of New Orleans.
The move comes less than two months after the San Ramon, Calif.-based oil giant approved a $7.5 billion project to develop its Jack and St. Malo fields in the deep-water Gulf, one of the biggest investments ever in the region. And it's the latest sign of the area's strategic importance to Western oil companies as the global hunt for oil becomes more difficult.
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The rig explosion at BP's Macondo well, which killed 11 and touched off the nation's worst oil spill, spurred regulators to enact a raft of new safety and environmental requirements that the industry fears will drive up costs. Those rules have stalled approval of new drilling permits in the Gulf, though a federal moratorium on deep-water activity was lifted in October. And more changes are expected as federal investigative panels into the BP accident make recommendations in coming months.
Delays created by the government moratorium and related issues are likely to cut into anticipated oil production from the Gulf in coming years.
Prior to the Macondo incident, oil and gas output from the deep-water Gulf was expected to hit 1.5 million barrels per day by 2015, up from 1.2 million barrels this year, said Leta Smith, director of IHS CERA's E&P Trends Forum in Houston. Now, it is expected to fall to 1.1 million barrels per day by 2015, she said. (Emphasis added.)
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Chevron has been a responsible producer in the deep water area for years. The company's cost of production will go up through no fault of its own because the Obama administration as become unnecessarily risk adverse in the Gulf.
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