Energy major Royal Dutch Shell PLC (RDS.A) has got the green light for oil and natural gas exploration in the Gulf of Mexico (GoM). The approval by the U.S. regulators – the first in the region since British giant BP plc’s (BP) oil rig disaster in April last year – is being hailed as an important step towards safer deepwater exploration.
As a reminder, on April 20, 2010, offshore driller Transocean Inc’s (RIG) ultra-deepwater Horizon drilling platform, contracted to BP, sank following an explosion while operating in the U.S. GoM off the coast of Louisiana.
The incident killed 11 workers and spewed more than 200 million gallons of crude in what is touted as the worst oil spill in U.S. history. Subsequently, a moratorium was imposed on offshore drilling in the region at water depths of more than 500 feet, which was lifted on October 12, 2010.
Shell’s exploration plan will see a unit of the Anglo-Dutch supermajor – Shell Offshore Inc. – drill three new exploratory deepwater wells in roughly 2,950 feet of water in a field located 130 miles off the Louisiana coastline.
According to the U.S. Interior Department, which oversees offshore drilling, the project have been given the go-ahead only after the fulfilment of strict safety and environmental requirements for offshore operations that have been imposed in the aftermath of the BP oil spill. Following the federal nod, Shell will now be required to apply for specific permits for each well it drills.
Royal Dutch Shell – Europe’s largest oil company by market value and ahead of BP and Total SA (TOT) – owns one of the largest integrated oil and gas businesses in the world. The group has operations all over the world and is involved in various activities related to oil and natural gas, chemicals, power generation, renewable energy resources and other energy-related businesses.
Royal Dutch Shell ADRs currently retain a Zacks #3 Rank, which translates into a short-term Hold rating.
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