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Europe Considers a Curb on Deepwater Drilling


Published: October 12, 2010

LONDON — As the United States lifted its moratorium on deepwater oil drilling Tuesday, the European Commission  was on the verge of proposing a curb on drilling in extreme conditions until an inquiry into the causes of the fatal explosion at a BP rig in the Gulf of Mexico was completed.

President Barack Obama  imposed the moratorium after the blowout of a BP well on April 20 led to the largest offshore oil spill in American history. He lifted the ban after imposing new rules intended to prevent another such disaster.

Günther Oettinger, the European Union energy commissioner, was expected to say on Wednesday that rules on oil and gas exploration in the union were too fragmented at a time when companies are going into deeper and rougher waters to seek new sources of fossil fuels.

In an appearance in London, the chief executive of Royal Dutch Shell, Peter Voser, on Tuesday strongly defended deepwater oil and gas drilling even as he acknowledged that the industry had failed to prepare adequately for the accident in the Gulf of Mexico and its aftermath.

Speaking at Oil and Money, a conference convened by The International Herald Tribune, Mr. Voser suggested that the explosion in the Gulf of Mexico had been, at least in part, a result of shortcomings by BP and the other companies involved.

Shell “clearly would have drilled this well in a different way and would have had more options” to prevent the accident and limit its impact.

Even so, Mr. Voser said the oil and gas industry “learns, and learns fast,” when it comes to developing safer designs for wells and better ways of counteracting and containing spills.

The industry was making every effort to ensure that “all the learning is taken into account and deepwater drilling can continue,” Mr. Voser said.

In Brussels, the European Commission was expected to propose that countries in the European Union adopt a voluntary moratorium on drilling in very deep waters, and in environmentally sensitive areas like the Arctic, until the results of a United States government inquiry into the causes of the Deepwater Horizon accident is completed. The results of that inquiry are expected in January.

Mr. Oettinger’s proposal would be voluntary for governments but would seek to give them the means, under E.U. law, to impose a ban if they choose.

Mr. Oettinger also was expected to propose that the E.U. agree on new laws that would require governments that license offshore drilling sites to check whether companies had the ability to pay to clean up a spill and to repair any damage to the natural environment. A formal proposal for legislation on liability could follow early next year.

Nobuo Tanaka, the head of the International Energy Agency, was among other senior figures at the Oil & Money conference on Tuesday who underlined the importance of pushing forward with deepwater drilling.

“If there is a delay globally, the impact could be huge,” said Mr. Tanaka, the executive director of the Paris-based agency, referring to how delays to new offshore deepwater oil and gas drilling could affect the oil market.

Mr. Tanaka added that about one-third of oil production globally comes from offshore projects. He said the level was expected to rise to about one-half by 2015.

Ivan Sandrea, a vice president at Statoil, a Norwegian oil company, said deepwater wells had accounted for 40 percent to 60 percent of new oil discoveries in recent decades. Deepwater sources were “a big thing for all of us,” he said.

The accident in the Gulf of Mexico meant there would be a “higher cost environment” in the future because of new regulations, inspections and other factors, he said. There also would be a “reduced interest for the most environmentally sensitive areas,” he added.

The American moratorium had idled 33 deepwater rigs in the Gulf of Mexico, affecting many jobs and triggering anger in the region. Though it was lifted, officials have said that it could be weeks or even months before drilling operations can resume because new permits must now be granted.

Drilling also has been a sensitive matter for European governments, which want to be seen to be defending the environment against damage from the fossil fuel industry but are reluctant to cede sovereignty on matters concerning their energy sector.

Britain was particularly wary of mandatory E.U. intervention on the grounds that it already has a robust safety regime in place. British officials also contend that natural gas, which is responsible for less environmental damage than alternatives like coal, is critical to its transition to a low-carbon economy.

Even if E.U. member governments choose to act, there is a limited amount they can do to stop some of the most potentially sensitive projects.

One of the most important deepwater projects in the region is in waters outside European jurisdiction. By the end of the year, BP plans to begin drilling below the Mediterranean Sea off the coast of Libya a few hundred kilometers from E.U. member states like Malta, Italy and Greece.

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