Oil Companies Expand Offshore Drilling, Pointing to Energy Needs

Shell and others say they plan to drill for oil and gas in the Gulf of Mexico in part because doing so releases fewer greenhouse gases than drilling on land.

A ship visible in the distance. The sky is tinted orange from a sunset.
An oil drilling ship off the coast of Louisiana in the Gulf of Mexico.Credit…Erin Schaff/The New York Times

Ivan Penn

By Ivan Penn

Reporting from Shell’s Appomattox offshore platform, New Orleans, Houston and Los Angeles

About 80 miles southeast of Louisiana’s coast, 100,000 metric tons of steel floats in the Gulf of Mexico, an emblem of the hopes of oil and gas companies.

This hulk of metal, a deepwater platform called Appomattox and owned by Shell, collects the oil and gas that rigs tap from reservoirs thousands of feet below the seafloor. Equipment on the platform pipes that fuel to shore.

Political and corporate leaders have pledged to reduce planet-warming emissions to net-zero by 2050. But oil companies like Shell are betting that the world will need oil and gas for decades to come. To serve that demand, they are expanding offshore oil and gas drilling into deeper and deeper waters, especially here in the Gulf of Mexico.

Offshore production, oil executives argue, is not only crucial to power cars, trucks and power plants but also better for the planet than drilling on land. That’s because such operations emit far less of the greenhouse gases that are warming the planet than producing the same amount of oil and gas on land, according to industry estimates.

“The world will continue to need oil, by the way, even in 2050,” Wael Sawan, chief executive of Shell, said in a recent interview. “It will have to be lower and lower emissions.”

The greenhouse gas emissions associated with extracting a barrel of oil from the Gulf of Mexico are as much as a third lower than emissions from producing a barrel of oil from fields on U.S. soil, according to a report published last year by the National Ocean Industries Association, an industry group for offshore oil, gas and wind businesses. (Those numbers do not include the emissions created when fossil fuels are burned in engines or power plants, which are much greater than emissions from producing and refining oil and gas.)

Oil production in the Gulf of Mexico fell for several years after the 2010 Deepwater Horizon explosion caused the worst offshore oil spill in U.S. history. But the gulf’s oil output has been rising over the last decade. The renewed interest in offshore production is part of a larger trend: The United States has recently set records for oil production, extracting more crude than any other country.

Booming oil and gas production in the United States has alarmed climate activists and scientists who want the energy industry to pivot more quickly to cleaner fuels and technologies like wind and solar power and electric vehicles.

“We’re not talking about stopping oil production today,” said Brettny Hardy, a senior lawyer in the Oceans Program at Earthjustice, a nonprofit environmental law organization. “But no matter how you look at it, there’s a really dire need to accelerate this shift to clean energy. The things the industry is doing now is not going to help that transition.”

To many environmentalists, offshore fossil fuel production’s potential for disaster is significant. The spill caused by the Deepwater Horizon rig, which was owned by BP, resulted in significant damage to marine life, the fishing industry and the Gulf of Mexico’s beaches.

The spill helped bring attention to Rice’s whale, which lives only in the Gulf of Mexico and is classified by the federal government as an endangered species. Fewer than 100 of these whales are left because of incidents like the Deepwater Horizon spill and collisions with vessels.

“The concern and worry is there for the right reasons because we have been burned once because of Deepwater Horizon,” said Najmedin Meshkati, a professor of engineering at the University of Southern California who served on a National Academies committee that studied that spill.

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The Deepwater Horizon disaster in 2010 was the worst offshore oil spill in U.S. history.Credit…U.S. Coast Guard, via Getty Images

The Biden administration had planned to scale back lease sales for oil drilling in the gulf, which environmentalists said would help protect Rice’s whales. In August, the Bureau of Ocean Energy Management reduced the area available for leases from 73 million acres to 67 million acres.

But in November, the U.S. Court of Appeals for the Fifth Circuit rejected the administration’s plans. A month later, oil companies offered $382 million for the right to drill for more oil and gas.

Oil executives say offshore oil operations are far less dangerous now thanks to advances in technology and improvements in standards and regulations. “Offshore oil and natural gas exploration and production is the safest it’s ever been,” said Holly Hopkins, vice president of upstream policy at the American Petroleum Institute, a trade group.

Energy companies favor drilling in the gulf because there is a lot of oil and gas there, especially under very deep waters. At the end of 2023, the number of deepwater offshore platforms in the United States was more than three times the number in shallow waters — they were about the same just 14 years earlier, according to data from the American Petroleum Institute.

Federal government analysts estimate that oil production in the Gulf of Mexico will grow through 2027. Natural gas production in the gulf is expected to largely remain flat through the early 2030s.

Shell is the biggest oil and gas producer in the region’s waters. Its outsize presence in the gulf is on display at Appomattox, which has a displacement bigger than the world’s largest aircraft carrier, according to the company.

The platform was brought online in 2019 and can house up to 180 people. It stays in place as ships drill wells near it and connect those wells by pipe to the platform, where equipment separates oil, natural gas and water.

Shell recently launched a smaller floating platform, the Whale, which can house up to 60 people. Another unit, Sparta, is under development. In all, Shell, a London-based global energy giant, operates nine active platforms — including four with built-in drill rigs — in the Gulf of Mexico.

On a reporter’s recent visit to Appomattox, about 130 people were working on board, including oil and gas engineers, cooks, janitors, a medic and laundry facility operators who keep washers and dryers spinning 24 hours a day.

Crews live on the platform for 14 consecutive days, working 12-hour shifts. They return to homes across the world for two weeks, before coming back for another 14-day stint.

There is a sense of pride among those aboard, though they recognize that many people think their industry is destroying the planet.

“There is another side that people don’t talk about,” said Matt Flanakin, a ballast control operator on Appomattox for Shell. “We know there’s a need to reduce carbon emissions. But we still need fossil fuels.”

The platform floats on the deep blue waters with little else in sight. On occasion, a drill rig ship appears in the distance. These vessels are scouring the seafloor for sources of oil.

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Rich Howe, executive vice president of Shell’s global deepwater business, during a visit to the Appomattox. Credit…Erin Schaff/The New York Times

The platforms create artificial reefs that attract fish and dolphin pods to Appomattox, said Rich Howe, executive vice president of Shell’s global deepwater business.

Shell is not alone in expanding its operations offshore. BP, Chevron and other energy giants are also expanding or planning to expand operations in the Gulf of Mexico.

“This is the cradle of global deepwater,” Mr. Howe said. “It’s where a lot of the technologies were invented.”

The gulf has an extensive network of pipelines and equipment that helps deliver the oil and gas directly to onshore facilities with little processing through pipelines. That makes extracting oil and gas from underground reservoirs in the gulf more efficient, ultimately helping to produce less emissions.

Technology has also reduced the need for as many offshore workers, who are flown by helicopter to platforms and drill rigs. Some control room operators work remotely onshore. And the companies say they are minimizing the amount of natural gas they burn off during a process called “flaring.”

“We want it to be as secure, affordable and as low-carbon as it can be,” said Andy Krieger, a senior vice president for the Gulf of Mexico and Canada at BP, which has five platforms in the Gulf of Mexico.

But plans by oil giants, especially those based in Europe, to invest in offshore production strike some climate experts as a retreat from the companies’ renewable-energy investments in recent years.

Mr. Sawan, the Shell chief executive, is clear that the company should focus on the businesses it knows best, a category that includes oil, natural gas and hydrogen. He said it should let other companies, including businesses with which Shell has financial and commercial relationships, develop renewable sources like solar power.

That doesn’t mean Shell is uninterested in newer parts of the energy sector, he added. He singled out electric vehicle charging as an area where his company plans to expand. To that end, Shell recently announced that it would close 1,000 gasoline stations, or about 2 percent of its retail presence, in 2024 and 2025 and expand its electric vehicle charging network to 200,000 public charging points globally by 2030, from about 55,000 now.

“At the end of the day,” Mr. Sawan said at a recent energy conference in Houston, “the real intent here is to be able to bring that multidimensional nature of the energy transition and move this dialogue that seems to fixate on ‘Is it oil and gas, or is it solar and wind?’ It’s all, and we need them in abundance.”

Ivan Penn is a reporter based in Los Angeles and covers the energy industry. His work has included reporting on clean energy, failures in the electric grid and the economics of utility services. More about Ivan Penn

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