Bloomberg News

Oil Fields Kept Off-Limits May Be Underestimated, API Says

November 17, 2011

(Updates with U.S. comment starting in seventh paragraph.)

Nov. 15 (Bloomberg) -- President Barack Obama’s administration may be underestimating the amount of oil available in offshore areas closed to drilling, the largest U.S. energy trade group said.

Companies represented by the American Petroleum Institute may find that the Eastern Gulf of Mexico and the waters of the Atlantic and Pacific hold more oil and gas than estimated by the government, provided producers can conduct seismic and exploratory work in the areas, Erik Milito, API group director of upstream and industry operations, said today.

“Historically, the more we work, the more we find,” Milito said during a conference call with reporters. “We need to be able to, one, get out there and do the geological and geophysical activity to allow us to get new information, and two, we need to have actual leasing, so that we can go out there and explore.”

The Interior Department is planning 15 offshore oil-lease sales from 2012 to 2017, excluding along the Atlantic and Pacific coasts. The U.S. plans two auctions, in 2014 and 2016, in areas of the eastern waters of the Gulf that aren’t blocked by a moratorium imposed by Congress.

The administration said the leasing sales will open for development more than 75 percent of the undiscovered and recoverable oil and gas resources on federal offshore lands.

The estimate is based on data from the 1970s, and is inadequate, Milito said.

Beaudreau Speaks

The Bureau of Ocean Energy Management, which is in charge of offshore development, is aiming to add information about the resource potential in the middle and south Atlantic by allowing seismic activity in the area, Tommy Beaudreau, director of the agency, said today at the Platts Energy Podium, an event in Washington. Data about the Atlantic reserves is decades old, he said.

“There’re a number of companies that have expressed interest in conducting those seismic surveys,” Beaudreau said. “Those measures will go forward.”

On the other hand, the data used to evaluate resources and plan lease sales in the Gulf of Mexico is “extremely modern, extremely robust,” he said.

The companies represented by the API include Exxon Mobil Corp., the world’s largest company by market value, and BP Plc, the largest holder of deep-water leases in the Gulf of Mexico.

--Editors: Steve Geimann, Larry Liebert

To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net


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