Gulf of Mexico drilling is rebounding

MORGAN CITY, La. — Drilling in the Gulf of Mexico is making its way back in the aftermath of the 2010 Deepwater Horizon oil spill amidst the stringent drilling standards imposed after the disaster, said Roger Jenkins, chief operating officer of Murphy Oil based in Houston.

Jenkins was the guest speaker at Tuesday’s meeting of the Atchafalaya Chapter of the American Petroleum Institute. Jenkins began his career with Texaco in Morgan City in 1984.

“The Gulf of Mexico’s very valuable. The Gulf of Mexico’s very valuable for jobs. Rig count is back,” Jenkins said. There have been improvements in drilling procedures and safety since the oil spill, he said.

“Clearly, we have a better containment plan in the event of a blowout than we did before … Everyone has this ability to put a cap and stack on and catch the oil … and flow it into a facility,” he said. “There’s incredible testing and a lot of rigor around not having it happen ever again, of course.”

While the drilling moratorium was in effect in the Gulf of Mexico, a massive oil field and hydrocarbon producing formation from the Mexico border extending into east Texas along the coast, called the Eagle Ford Shale saved a lot of jobs in the region, he said at the Petroleum Club of Morgan City.

“This really helped our economy and helped our workers and helped the oilfield to have this run up. Had we not had this run up in Eagle Ford Shale, I really think this moratorium would have been very detrimental to Louisiana and to Texas as well,” he said.

There are now 240 rigs today in the Eagle Ford Shale development, he said.

About 30 deep water rigs were shut down after the oil spill, he said.

The issue with BP’s Macondo Prospect well, which was the one that blew out during the oil spill, was an issue of abandonment, Jenkins said. The well had been incased properly and drilled to its full depth when BP decided to leave the well. “When you leave one of these big wells behind, you have to put water in the well and put a cement plug in there, and they were in the process of doing that when it happened.”

He said the government instituted rigorous standards to adhere to when the real problem was an “abandonment procedural problem that we could have addressed and never stopped drilling.”

What is really needed is plug and abandonment regulations, he said. “There have been all kinds of things we could have done. We could have brought out inspectors to inspect these tests. We could have done different things about cementing procedures … but that’s not what we did at all. We stopped drilling, and the well was already drilled.”

Jenkins said, now, with drilling in the Gulf of Mexico, companies must prove to the government that the well “could deliver under perfect blowout conditions.”

Though the Eagle Ford Shale helped the region survive the drilling moratorium, drilling in the Gulf of Mexico is favorable by comparison, he said.

“The Gulf of Mexico project is a little bit smaller. It goes up to a slightly higher level of production … and it gets all the oil out quicker.” Because oil can be captured more quickly, the Gulf has a much higher rate of return than the Eagle Ford field, he said.

When asked about work to complete the Keystone Pipeline, which would carry oil from Canada to refineries in the Gulf of Mexico, Jenkins said Murphy Oil has a big presence in Canada and needs oil to come down the pipeline. “There’s a very real need for heavy oil on the refineries of the Gulf Coast, and Keystone will help in resolving that matter, and I think it’s something that keeps oil in North America and keeps Canada, a very good trade partner, from trading the oil to China,” Jenkins said.

“I think it’s very positive for oil prices, very positive for refining in the Gulf Coast and United States to have that work.”

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