ExxonMobil Battles U.S. Over Gulf Oil Discovery

By Admin
With the Gulf of Mexico slowly opening up once more to offshore exploration and production activity, companies like ExxonMobil have been quick to jump...

 

With the Gulf of Mexico slowly opening up once more to offshore exploration and production activity, companies like ExxonMobil have been quick to jump back in the drilling game.  However, the U.S. Interior Department is being stricter than ever with permits, and according to them, ExxonMobil’s permit for its huge Julia oil field discovery—one of the largest fields found in the Gulf of Mexico in recent history—has expired. 

The Julia field is believed to hold more than 700 million barrels of oil and gas equivalent.  ExxonMobil announced the discovery, which lies roughly 250 miles southwest of New Orleans, in June.  Exploiting the fields could yield billions of dollars for both ExxonMobil and in royalties paid to the U.S. government.  In fact, a 1 billion barrel field could generate around $10.95 billion in government royalties.

SEE OTHER TOP STORIES IN THE WDM CONTENT NETWORK

Scouts Honor: ExxonMobil CEO Rex Tillerson & Yellowstone

Top 20 Risk Factors Facing the Oil & Gas Industry

Read the latest issue of Energy Digital!

So why is the Interior Department reluctant to renew ExxonMobil’s permits, especially at a time when that kind of increased production could significantly reduce the United State’s oil shock?  The Interior Department claims ExonMobil’s leases are expired and the company hasn’t met the requirements for an extension. "Our priority remains the safe development of the nation's offshore energy resources, which is why we continue to approve extensions that meet regulatory standards," says a spokeswoman for the Interior Department.

ExxonMobil spokesman Patrick McGinn claims that the government traditionally grants extensions as a matter of course. "You state your case and you got it." The government's refusal "was unexpected."

ExxonMobil and partner to the field Statoil have filed separate lawsuits in a Louisiana federal court to extend the leases.  If the oil companies lose in court, the Julia field could fall into the hands of the federal government, ultimately delaying exploitation of the resources.  ExxonMobil lost in an appeals process to the feds in May, citing the company’s lack of a specific plan to produce the oil. 

While there’s no sense in playing favorites between the private and public sector, I would take it as a slap in the face to have invested millions into exploration activity to make one of the biggest oil and gas discoveries in recent history, only to have it ripped away by the regulators.  It will be interesting to see how this case plays out as the U.S. economy continues to implode and a gigantic question mark still looms over oil markets.   

Share

Featured Articles

Honeywell debunks hydrogen energy and its global challenges

Maya Gomez, Director of Green H2 CCM at Honeywell, uncovers the different types of hydrogen and the challenges of applying them for more sustainable energy

ABB Motion & WindESCo partner to strengthen wind energy

ABB Motion invests in WindESCo to sustain wind turbine performance, in a renewable energy drive that will help ABB in its net zero ambitions

Shell Energy UK and Germany acquired by Octopus Energy

Octopus delivers industry leading service whilst investing in clean energy systems — we will deliver this to the new customers too, says CEO Greg Jackson

Sustainability LIVE links to energy and electrification

Sustainability

Green energy: A hot topic at Sustainability LIVE 2023

Sustainability

Sustainability LIVE London sells out on 2023 conference

Sustainability