BP's deep Gulf comeback

By LOREN STEFFYHOUSTON CHRONICLE

March 4, 2011, 12:25AM

For all the talk of things returning to normal in the Gulf of Mexico, this isn't what anyone - except perhaps the folks at BP - had in mind.

Earlier this week, the Bureau of Ocean Energy Management & Other Stuff issued the first deep-water drilling permit since BP's oil disaster in April. Houston-based Noble Energy is the operator of the well, which had been under way before the government's drilling ban was enacted in the weeks after the accident.

Noble Energy may be the operator, but the company only owns about 23 percent of the well. Two smaller companies, Red Willow Production and Houston Energy, own smaller stakes.

And the holder of the biggest percentage, 46.5 percent? BP.

So the architect of the worst oil disaster ever in U.S. waters gets to be the first to return to the waters it tainted.

BP is the biggest leaseholder in the Gulf, and a random sample of projects is likely to include a disproportionate amount of BP involvement. Noble, for its part, met the government's new requirements for containing a BP-style disaster, and therefore, it deserves the permit.

In announcing the new permit earlier, the name of the project's biggest investor was conspicuously absent from the BO-etc's news release.

The permit is a green light for BP to resume drilling in the deep-water Gulf - and at the head of the pack, no less.

It also completes a months-long effort by the oil company to maintain access to some of its most lucrative offshore reserves. That process began last June, when BP agreed to create a $20 billion fund for paying claims to Gulf Coast business owners harmed by its oil spill.

'Shakedown' and beyond

Under a cover of political prattle about a government "shakedown," floated by congressional Republicans and voiced by Joe Barton, R-Ennis, BP secured an implicit guarantee that it would remain in the Gulf.

Amid mounting concern last summer that BP could face a takeover or bankruptcy because of its falling stock price, the Obama administration asked for collateral to ensure the $20 billion would be around even if the company wasn't. BP's suggestion: It could pledge its future royalties from its Gulf production.

Later in the summer, when a bill was introduced in the House that would have effectively prevented BP from getting a permit for seven years because of its safety record, BP threatened that it might be unable to meet its obligations under the fund.

The message was clear: For BP to honor its promise to make things right in the Gulf, the government had to give it another bite at the apple.

Now, it has.

BP, of course, isn't the operator, though given its large ownership stake, it will be the biggest financial benefactor from the new permit.

A safer operator?

Presumably Noble Energy will be a safer operator than BP was on the Macondo pro- ject, and denying or delaying the permit simply because of BP's passive role would have unfairly punished Noble and its smaller partners.

But BP's early return to the Mississippi Canyon formation is an insult to those still suffering from the company's last foray there. I'm talking, of course, about Gulf Coast residents and business owners, but I'm also talking about the rest of the offshore industry, which has had to endure months in limbo and hundreds of millions in lost revenue because of BP's carelessness.

Many in the industry feel that BP's reputation for cutting corners dragged the entire U.S. offshore business down with it this time.

Now, with the government's blessing, it's the first to be allowed back in.

The Gulf is returning to normal, and it seems, to business as usual.

Loren Steffy is the Chronicle's business columnist. His commentary appears Sundays, Wednesdays and Fridays. Contact him at loren.steffy@chron.com. His blog is at http://blogs.chron.com/lorensteffy.