Original Post: http://blogs.forbes.com/christopherhelman/2011/01/05/texas-oilman-tired-of-being-victimized-by-obama-drilling-moratorium-may-soon-invest-in-israel/?boxes=Homepagelighttop
ATP's Titan platform
When T. Paul Bulmahn was a kid in rural Texas his family of seven sharecropped a garden down the road from their home. Because they didn’t have enough land for cows, they raised goats and made decent money selling their easily digestible milk to the lactose intolerant. “Instead of letting things happen or being a victim of society we made things happen.” What’s more, “I always felt that being able to milk goats growing up gave me a fabulous touch with a basketball.”
Bulmahn, 66, now the chief executive of Houston-based ATP Oil & Gas, is once again figuring out how to make the best out of a tough situation.
Bulmahn says that within weeks he will announce a new oil and gas deal (most likely in Israel) that will enable him to take the first steps in saving his company from what he sees as victimization at the hands of the Obama administration in its overreaching response to the BP oil spill. “What’s being done now under the guise of an emergency which has already passed is not fair,” says Bulmahn.
For a small oil company ($800 million market cap) ATP has built an outsized position in the deepwater Gulf of Mexico, operating 18 wells. When BP’s blowout and oil spill occurred last year, ATP had 10 permits outstanding to drill wells and lay pipelines in the gulf. It was also in the process of completing and installing two $600 million platforms to produce oil and gas from new deepwater fields. If ATP could get going on all its permits, says Bulmahn, ATP could stand a good chance of doubling its production to 50,000 barrels per day within a year.
But the deepwater moratorium stopped ATP dead in its tracks. ATP’s drilling plans are not nearly so risky as BP’s was at the Macondo prospect. It wants to use the drilling rig integrated into its new platform called the Titan, to merely drill a sidetrack (like a branch) off of an exisiting well into a reservoir that is already producing from 12,000 feet deep. The government approved ATP’s well location in Mississippi Canyon Block 941 back in June 2008 and ATP filed its permit to drill the sidetrack in July 2009.
Allowing this kind of drilling project should be a no brainer. ATP has supplemented, revised and amended its permit to meet every new request by BOEMRE. What’s more, the Titan platform exceeds all regulatory requirements for safety. Bulmahn is especially proud of the Titan–the first deepwater platform ever to be built in the U.S. with American labor. Designed three years before BP’s spill, Titan features a blowout preventer on the seafloor with two “shear rams” to seal the pipe, plus another BOP system above the water on the platform itself.
Over-engineering the Titan was just common sense to Buhlman, who says that as a small-fry in the deepwater ATP has always recognized it needs to be even safer and more careful than its bigger brethren. ATP has never had a spill, yet, gripes Bulmahn, “BP’s own partner Anadarko has already indicated publicly that there was gross negligence involved. And for that the safe and environmentally sound industry was shut down.”
Bulmahn sees the administration’s actions as a concerted effort to shut down and jeopardize the future of not just BP but “all the companies that had drilled safely and environmentally soundly.”
Can ATP survive even with permits? “The new environment for risk means that managers of most companies are betting the entire company on every well,” says Gary Adams, lead oil and gas consultant for Deloitte. Not many companies have the balance sheet to withstand a possible $30 billion hit for oil spill cleanup. Thus, says Adams, “the Gulf could become a game for only the biggest companies.”
So Bulmahn started looking for options. To ease ATP’s debt load he spun off Titan as a subsidiary and borrowed $350 million against it. More importantly, he began looking all around the world for oil-rich countries “that are desirous of developing their offshore resources, desirous of our expertise, and which would prefer to work with a smaller company like ours that may not have entanglements in other countries.”
Bulmahn won’t yet say where ATP is heading, but rumor is that a deal has been struck that would give ATP rights to develop oil and gas finds offshore Israel, near the area where giant new fields like Leviathan and Tamar have been discovered in recent years.
Going overseas wasn’t Bulmahn’s first choice. “I’m an American first. it’s not where we need to be for our own country’s interest,” he says. But he didn’t see much choice: “I don’t want us ever to be victimized again.”
He wrote as much in a letter to President Obama sent December 20: “Please Mr. President, give ATP a permit to return to work rather than forcing more American jobs to be lost.”
Maybe the President listened. Though the victimization isn’t over yet, on Monday BOEMRE announced a slight crack in the permit logjam. ATP was notified that its sidetrack permit would finally be allowed to proceed as long as ATP satisfied new safety rules.
Whitney Stanco, analyst at MF Global, says that these new rules will likely include a recalculation of a potential worst-case oil and gas discharges that could potentially erupt from all reservoirs intersected by a well if that well were to fail completely with nothing to stauch the flow.
This is far stricter than previous rules, and says Stanco, the companies named on Monday might not be able to get back to drilling if their new worst-case scenario is significantly higher than their old one. Stanco expects permits for brand-new wells, when they finally come, to include a requirement that companies conduct environmental assessments that could take as much as 12 months.
It’s an opening, and Bulmahn will take it. But he’s not happy about it. Delays are costing ATP $330,000 per day for labor and equipment that’s sitting around doing nothing. “For America to be great we need an abundance of energy, of all kinds, not just oil and gas. We need nuclear and solar and windpower and biomass,” says Bulmahn. “We need them in abundance and we need them cheaply to be able to continue to grow our great country and make it greater than it is now.”
No comments:
Post a Comment