Friday, February 18, 2011

Are Oil Prices Higher Due to the moratorium on deep water drilling in the Gulf of Mexico?

SHOOT: They certainly seem to be a rush to get out there again, and probably with good reason. Oil prices are on the up and up again.

, On Thursday February 17, 2011, 5:48 pm EST
NEW YORK (AP) -- A group of oil companies led by Exxon said Thursday it has built a system that can stop an undersea oil spill within weeks, a critical step toward resuming drilling in the deepest parts of the Gulf of Mexico.
The group said its combination of equipment and support vessels can contain a spill similar to BP's massive gusher, which took almost three months to plug. Some of the equipment was used by BP in containing its well blowout last year.
Regulators have demanded that oil companies demonstrate the capability to contain the blowout of an underwater well before granting permits to drill again in Gulf waters deeper than 500 feet.
Exxon said this system meets that demand and should have no trouble gaining government approval. The group's engineers consulted with regulators during development, Exxon said.
"They've been looking at the system all along," said Clay Vaughn, an Exxon Mobil Corp. vice president who is supervising the response network. In an interview with The Associated Press, Vaughn said regulators observed tests of the equipment Wednesday.
The system is designed to be fully assembled in two to three weeks after a blowout. It can work at depths up to 8,000 feet and capture as much as 60,000 barrels of liquid and 120 million cubic feet of gas per day. BP's Macondo well blew out at about 5,000 feet below sea level and spilled an average of 52,400 barrels per day. At its peak, BP's well spewed 61,900 barrels per day.
Drilling in the Gulf was suspended last year when the Obama administration imposed a months-long moratorium following the BP spill. The ban was lifted in October, but deepwater drilling has not yet resumed.

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