By Christopher Swann
NEW YORK, April 29 (Reuters Breakingviews) - Investors have knocked down BP shares as its Gulf of Mexico oil spill expands. So far, however, they haven't done the same to other oil majors. Given the growing significance of deep sea drilling, this seems too sanguine. As the slick grows, plans for offshore drilling in the United States are at risk and similar operations worldwide will come under scrutiny.
It remains to be seen whether BP's blowout was the result of stresses caused by drilling so far under water. But as oil companies venture deeper and miles below the seabed in search of oil, the chance of mishaps increases. If the spill -- or its magnitude -- is linked to these technical challenges, the implications could be widespread.
Deep sea oil has become an increasingly important part of the mix for oil majors. Production of crude pumped up from waters 1,000 feet deeper or more surged by almost 70 percent or 2.3 million barrels a day between 2005 and 2008, according to PFC Energy, a consulting firm. Now roughly 8 percent of global oil comes from deep water fields.
And even if deep water drilling techniques are ultimately vindicated, the political slick may spread. Already, the plan to allow oil companies to extend their operations further off the U.S. coast is under threat. Bill Nelson, a Democratic senator from Florida, has lost no time in filing a bill to prohibit the expansion of offshore drilling. It would only be natural for residents of Brazil's coastal areas -- home to some of the biggest deep sea finds -- to demand reassurance too.
Yet aside from BP, whose ADRs fell 8.3 percent in New York, Thursday was a breezy day for oil stocks. For example, Chevron CVX.N>, which has major deep water operations in the Gulf of Mexico, was up 2 percent. Brazil's Petrobras also rose 2 percent. Of course, investors may have been cheered by positive earnings reports from companies in the sector. But more caution across the industry looks merited.
CONTEXT NEWS
-- The spill from a BP rig that blew up off the Gulf of Mexico is leaking five times more oil than previously estimated, according to a Reuters report on April 29.
-- Bill Nelson, a Democratic senator from Florida, said he was filing a bill to temporarily prohibit President Obama's administration from expanding offshore drilling.
-- Shares in BP were down 8.3 percent on April 29. Shares in Chevron, the second largest U.S. oil company, were up 2 percent. ConocoPhillips was up 1 percent and Total was up 2.3 percent.
-- Reuters story:
-- Reuters Take a Look:
-- Related stories: http://www.breakingviews.com/2010/04/27/bp.aspx?sg=archive
-- For previous columns by the author, Reuters customers can click on
(Editing by Richard Beales and David Evans) Keywords: BREAKINGVIEWS OILSPILL/ (chrsitopher.swann@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, April 29 (Reuters Breakingviews) - Investors have knocked down BP shares as its Gulf of Mexico oil spill expands. So far, however, they haven't done the same to other oil majors. Given the growing significance of deep sea drilling, this seems too sanguine. As the slick grows, plans for offshore drilling in the United States are at risk and similar operations worldwide will come under scrutiny.
It remains to be seen whether BP's blowout was the result of stresses caused by drilling so far under water. But as oil companies venture deeper and miles below the seabed in search of oil, the chance of mishaps increases. If the spill -- or its magnitude -- is linked to these technical challenges, the implications could be widespread.
Deep sea oil has become an increasingly important part of the mix for oil majors. Production of crude pumped up from waters 1,000 feet deeper or more surged by almost 70 percent or 2.3 million barrels a day between 2005 and 2008, according to PFC Energy, a consulting firm. Now roughly 8 percent of global oil comes from deep water fields.
And even if deep water drilling techniques are ultimately vindicated, the political slick may spread. Already, the plan to allow oil companies to extend their operations further off the U.S. coast is under threat. Bill Nelson, a Democratic senator from Florida, has lost no time in filing a bill to prohibit the expansion of offshore drilling. It would only be natural for residents of Brazil's coastal areas -- home to some of the biggest deep sea finds -- to demand reassurance too.
Yet aside from BP, whose ADRs fell 8.3 percent in New York, Thursday was a breezy day for oil stocks. For example, Chevron CVX.N>, which has major deep water operations in the Gulf of Mexico, was up 2 percent. Brazil's Petrobras also rose 2 percent. Of course, investors may have been cheered by positive earnings reports from companies in the sector. But more caution across the industry looks merited.
CONTEXT NEWS
-- The spill from a BP rig that blew up off the Gulf of Mexico is leaking five times more oil than previously estimated, according to a Reuters report on April 29.
-- Bill Nelson, a Democratic senator from Florida, said he was filing a bill to temporarily prohibit President Obama's administration from expanding offshore drilling.
-- Shares in BP were down 8.3 percent on April 29. Shares in Chevron, the second largest U.S. oil company, were up 2 percent. ConocoPhillips was up 1 percent and Total was up 2.3 percent.
-- Reuters story:
-- Reuters Take a Look:
-- Related stories: http://www.breakingviews.com/2010/04/27/bp.aspx?sg=archive
-- For previous columns by the author, Reuters customers can click on
(Editing by Richard Beales and David Evans) Keywords: BREAKINGVIEWS OILSPILL/ (chrsitopher.swann@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.