BP Economist: Offshore Drilling Ban May Have Oil Supply "Consequences"

23rd Jun 2010 04:27

PERTH (Dow Jones)--BP Group Chief Economist Christof Ruhl said Wednesday the temporary ban on deepwater offshore drilling in the U.S. will have an impact on global oil supplies, particularly if it spreads to other countries. "In general I think that limitations to deepwater oil exploration will have consequences for supply," Ruhl told reporters in Perth after presenting BP's Annual Review of World Energy. "It is obviously a fast-growing segment; we have the moratorium in the U.S., we have similar kinds of moratoriums in Norway and Canada--if that spreads it will have an impact," he said. Ruhl said an "inflection point" would come when drilling rigs are "physically removed" from the Gulf of Mexico in response to the ban. That would mean drillers had different contracts to go to in places such as West Africa, Brazil and the Caspian Sea. "That would be a process hard to reverse," he said. "It hasn't happened yet, but that would be the point at which one could recognize deeper changes." Oil and gas companies began shutting down 33 deepwater exploration rigs last month after U.S. President Barack Obama imposed a six-month moratorium on developing new deepwater wells in the Gulf of Mexico. However, the move faces legal challenges from the drilling sector. A federal judge in Louisiana on Tuesday ruled against the ban, dealing a blow to the Obama administration's response to the Gulf of Mexico oil spill. Judge Martin Feldman of the U.S. District Court for the Eastern District of Louisiana ordered the U.S. Department of Interior to "immediately" stop enforcing the moratorium until a full trial on its merits occurs. Despite the decision, it is unlikely that many companies will restart drilling immediately, given the complex legal maneuvering likely to come. Oil has been leaking into the Gulf of Mexico since the explosion and sinking of the Deepwater Horizon rig in late April. As the oil slick has grown, operator BP has faced withering criticism, and deepwater drilling has come under scrutiny. Last week International Energy Agency Executive Director Nobuo Tanaka predicted that global oil output could fall by up to 900,000 barrels a day from projected levels for 2015 if oil-producing countries follow the U.S. lead and impose moratoriums on developing new offshore oil reserves. But BP's Ruhl said it is "too early" to quantify the impact given the wide diversity of forecasts, ranging from 46,000 barrels a day by some industry consultants, to the much larger estimates from the IEA. "That wide range already tells you that people just don't know," he said. -By Stephen Bell, contributing to Dow Jones Newswires; 61-8-9244-4243; [email protected] (END) Dow Jones Newswires June 22, 2010 23:27 ET (03:27 GMT)