Three years after the most devastating maritime oil spill in U.S. history, the future of offshore drilling in North American waters remains uncertain. Just as the environmental and legal cleanup of the Deepwater Horizon accident is slowly coming to an end and investments into offshore projects are picking up, new problems disrupt operations on deep-water rigs from Texas to Brazil. In late January, U.S. regulators discovered flawed connecting bolts that link drilling tubes to the sea floor on rigs equipped by GE. The discovery and subsequent replacement of the problem caused week long suspensions and a substantial repair bill for operators and, possibly even worse, hurt the already ailing public image of deep-water oil exploration.
To make matters worse, in March the U.S. Interior Department published the results of its review of Shell’s 2012 offshore season in the Arctic Ocean. The report criticized Shell for a number of serious environmental violations and accidents associated with their Alaskan operations and concluded that the company had failed to properly safeguard and supervise their drilling equipment, a practice that climaxed in an accident involving the drilling rig Kulluk that ran aground Sitkalidak Island on New Year’s Eve of 2012. Shell has already announced that they will suspend all offshore activities in the Arctic Ocean for 2013.
Although these setbacks complicate the public image of deep-water offshore exploration, there are also good reasons for production companies to expect the tides to turn in the near future. Especially applications for exploration permits in Canadian waters haves seen steady growth and numerous projects around Nova Scotia and Newfoundland indicate that deep water drilling might move northward. Additionally, manufacturers have realized that the only way to garner long-term support for deep-water drilling from both government regulators and the general public is to implement new and advanced technology in order to prevent future accidents. One impressive example of such innovations is Shell’s new offshore rig for the Gulf of Mexico, the Olympus. The rig is the largest of its kind and capable of drilling 24 wells at a time, and possesses an operational life-span of up to 70 years. Shell’s investment sends a clear signal to lawmakers and investors, and it seems that it is well received. In March, the federal government started a new five-year gulf leasing plan by selling the temporary rights to deep- water reserves expected to yield more than one billion barrels of crude oil and natural gas.
Despite its ups and downs, deep-water drilling is here to stay.
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