Wednesday, March 30, 2011
Dow Jones Newswires
by Ryan Dezember
BHP Billiton began late Monday drilling a deep-water well in the Gulf of Mexico, the first such work to take place since the U.S. government banned deep-water drilling in response to last year's oil spill, reported the head of the conglomerate's oil and gas business.
Speaking to investors during the Howard Weil Energy Conference here, J. Michael Yeager said that a rig had moved onto its Shenzi prospect and resumed drilling a well there.
"We're back there drilling and we're delighted to be doing that but we're a long way from the five rigs we had when the moratorium hit," Yeager said.
The U.S. government instituted a six-month ban on deep-water drilling after Transocean's Deepwater Horizon, which was being leased by BP, exploded, killing 11 and unleashing the largest offshore oil spill in U.S. history. Even after the government's official ban was lifted in October, no drilling permits were issued by regulators until Feb. 28.
BHP, the third largest producer in the Gulf, was given permission March 11 to resume drilling its well, work that was stalled by the moratorium. The Anglo-Australian conglomerate's permit is one of six U.S. regulators have issued in recent weeks.
Yeager said that the drilling ban stalled work on 11 Gulf of Mexico wells, trimming BHP's expected 2011 output of the equivalent of 165 million barrels of oil per day by 12 million barrels, Yeager said.
"It's been quite devastating but we're very glad to be out there," Yeager said.
Yeager also said that separate U.S. regulators on Tuesday approved BHP's $4.75 billion purchase of Chesapeake's Fayetteville Shale natural gas fields in Arkansas. The largest ever shale asset deal in U.S. history, encompassing 480,000 acres and pipelines, should close on Thursday, Yeager said.
BHP plans to spend between $800 million to $1 billion annually over the next decade to develop the Arkansas fields in an effort to triple production from the equivalent 65,000 barrels of oil per day seen now, Yeager said.
The move into North America, where the gas that is produced is sold domestically in the world's largest natural gas market, helps BHP expand its market, which is currently weighted toward selling to China, Yeager said.
"We have 60% of our assets in Australia sold to China," he said. "That's a risk that we'd like to diversify away from."
Speaking to investors during the Howard Weil Energy Conference here, J. Michael Yeager said that a rig had moved onto its Shenzi prospect and resumed drilling a well there.
"We're back there drilling and we're delighted to be doing that but we're a long way from the five rigs we had when the moratorium hit," Yeager said.
The U.S. government instituted a six-month ban on deep-water drilling after Transocean's Deepwater Horizon, which was being leased by BP, exploded, killing 11 and unleashing the largest offshore oil spill in U.S. history. Even after the government's official ban was lifted in October, no drilling permits were issued by regulators until Feb. 28.
BHP, the third largest producer in the Gulf, was given permission March 11 to resume drilling its well, work that was stalled by the moratorium. The Anglo-Australian conglomerate's permit is one of six U.S. regulators have issued in recent weeks.
Yeager said that the drilling ban stalled work on 11 Gulf of Mexico wells, trimming BHP's expected 2011 output of the equivalent of 165 million barrels of oil per day by 12 million barrels, Yeager said.
"It's been quite devastating but we're very glad to be out there," Yeager said.
Yeager also said that separate U.S. regulators on Tuesday approved BHP's $4.75 billion purchase of Chesapeake's Fayetteville Shale natural gas fields in Arkansas. The largest ever shale asset deal in U.S. history, encompassing 480,000 acres and pipelines, should close on Thursday, Yeager said.
BHP plans to spend between $800 million to $1 billion annually over the next decade to develop the Arkansas fields in an effort to triple production from the equivalent 65,000 barrels of oil per day seen now, Yeager said.
The move into North America, where the gas that is produced is sold domestically in the world's largest natural gas market, helps BHP expand its market, which is currently weighted toward selling to China, Yeager said.
"We have 60% of our assets in Australia sold to China," he said. "That's a risk that we'd like to diversify away from."
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