BP to Resume Drilling in Gulf of Mexico

BP will resume drilling in the Gulf of Mexico as early as July, less than 15 months after an accident that killed 11 workers and led to the worst offshore oil disaster in US waters.

BP sign
Ben Stansall | AFP | Getty Images
BP sign

The UK oil group has struck a deal with US regulators, under which it will be allowed to drill 10 existing wells that were under way before the accident and which it needs in order to maintain or increase production on existing platforms, according to sources familiar with the situation. BP declined to comment.

In exchange for permission to return to drilling, which means BP can restart just weeks after other groups, including Chevron , were given consent, the UK group has agreed to 24-hour access to government overseers.

It has also detailed its plans in case of an accident or emergency, including what lessons it learnt from last year’s disaster.

Environmental groups greeted the news with dismay. “Despite going through the near-death experience of the Macondo well in the US, BP continues to pursue high-risk opportunities,” said Ben Ayliffe, senior campaigner at Greenpeace. “Strategically, the future BP seems to be doing what the old BP did.”

All of BP’s existing wells in the gulf are located in deep water. The company will not be allowed to drill any new exploration wells.

The deal is a coup for Bob Dudley, BP’s chief executive, and the prospect of increased production is likely to be welcomed by investors.

The US had been BP’s principal source of growth before last year. The group is the biggest license holder in the gulf and has more than 20 fields there.

Mr Dudley has had to fend off criticism from some of his UK shareholders over his handling of BP’s proposed $16 billion (£9.9 billion) share swap and Arctic alliance with Russia’s Rosneft, which has run into opposition from BP’s Russian partners in TNK-BP. A Stockholm arbitration tribunal will on Monday hear evidence from BP on why it should be allowed to proceed just with the share swap.