From: Ayesha Rascoe and Tom Doggett, Reuters
Published May 28, 2010 06:12 AM

U.S. to halt 33 exploration rigs in deepwater review

The U.S. government ordered a temporary halt to drilling at 33 deepwater exploration rigs on Thursday, part of a broader response to the massive BP oil spill that threatens efforts to tap offshore fields seen as crucial to increased U.S. oil output.

The move may potentially delay project development plans by companies like Chevron Corp in the Gulf of Mexico, where rising production has helped offset shrinking domestic onshore supply.

Unlike the administration's six-month extension of its ban on new deepwater drilling permits, and cancellation of a much-anticipated lease sale offshore Virginia, the pause for existing deep-sea exploratory rigs threatens to affect proven oil discoveries rather than untested areas.

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"These actions are all guided by the need to take a cautious approach to offshore oil and gas development, as we strengthen safety and oversight of offshore oil and gas operations," U.S. Interior Secretary Ken Salazar said on Thursday.

Although the measures would not affect oil wells already in production, the 33 exploratory rigs are supposed to stop at the first safe opportunity and implement new safety measures before resuming operations, officials said.

Salazar confirmed that the halt would not apply to rigs operating in shallow waters.

That could increase costs and delay development plans for companies like Royal Dutch Shell, which is among the biggest Gulf explorers, while major contract drillers who could be left with idled rigs include Transocean Ltd and Noble Corp.

Brazilian state oil company Petrobras said the suspension could slow the development of its Gulf of Mexico Cascade-Chinook fields that were originally scheduled to begin production in the second half of this year.

"Petrobras is evaluating the impact of the six-month extension of the moratorium and could modify its schedule," the company said in a statement.

Those areas were expected to reach 80,000 barrels a day over several years.

Energy consultants Wood Mackenzie previously estimated a six-month extension of the ban would delay 80,000 barrels a day in U.S. oil production that was expected in 2011.

Article continues: http://www.reuters.com/article/idUSTRE64Q6F020100528

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