Shell: Deep Water Oil Drilling Will Go On

Deep ocean sites not just in the Gulf but worldwide are industry's targets

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by Graeme Wearden, Guardian

Royal Dutch Shell’s boss, Peter Voser, insisted that today it was not possible to satisfy the world’s growing energy demands without drilling for oil in deep-water reserves, despite the ongoing environmental disaster in the Gulf of Mexico.

At a conference in South Africa, Voser defended the oil industry’s push into deeper oil reserves and said Shell would continue to play its part, even as a tropical storm threatened to disrupt BP’s efforts to clean up oil off the coast of Louisiana.

"Given the rise in the population and the rise in the developing world of energy needs, we will have to develop those resources in deep waters, so my expectation is that we will go forward with it, but it will need some changes," Voser told the Fortune Global Forum in Cape Town.

It is now 68 days since the Deep-water Horizon rig exploded in the Gulf of Mexico, triggering a devastating leak on the seabed in which 100,000 barrels of oil have spewed into the water. BP’s failure to cap the leak has put the oil industry’s safety record under fierce scrutiny, with environmental campaigners demanding that deep-water drilling is banned until safety measures have been improved.

Voser, though, implied that the Macondo well would not have erupted with such devastating consequences if Shell, rather than BP, had been in charge.

"We would not have drilled the well in the same way. We have got other safety procedures across the globe. But I think for some companies there will be some learning from this as well," Voser said.

The future of deep-water drilling remains uncertain, after a US judge overturned a six-month ban imposed by President Barack Obama. The US is appealing against the ruling but may have to rewrite the moratorium if it is to prevent new wells being drilled in the Gulf this year.

It appears BP will be given the go-ahead to drill in deep-water sites off the coast of north Africa. The head of Libya’s National Oil Company said today that the "accident" in the Gulf of Mexico would not mean that BP lost its contract to drill for oil in the Mediterranean Sea.

"Accidents happen all the time. If an air crash takes place, we don’t stop air traffic," said Shokri Ghanem. "So we have to continue but we take this step to learn more lessons."

BP’s shares plunged 6.5% to a new 14-year low of 298p last Friday, meaning that more than £60bn has been wiped off its market capitalisation since 20 April.

Weather experts warned today that Tropical Storm Alex could hamper the clean-up operation in the Gulf. Although Alex is not expected to cross over the area of the spill directly, it could generate high waves that would make it harder to collect some of the leaking oil or prevent the spill reaching land.

The UK continues to argue that BP should not be forced to pay excessive levels of compensation that would endanger its future as a company. Speaking at the G20 summit, chancellor George Osborne said David Cameron had reminded Obama that BP was an international company.

"We have stressed that BP is an important global business. It has many investors in the US, it is the largest oil company in the US and it is both in the US interest and the UK interest that BP has a strong future," said Osborne.

BP has put $20bn (£13bn) into a compensation fund, but faces the prospect of claims from tens of thousands of people indirectly affected by the spill. Last Friday, a top New Orleans chef, Susan Spicer, sued the company over the loss of valuable local seafood.

(Republished with permission of the Guardian)