Bill Clinton Calls Pace of Deepwater Drilling Permits Ridiculous

Includes: ATPAQ, BHP, BP, OIL
by: Devon Shire

What does it say about the fairness of the actions of the current administration when you see Bill Clinton siding with Big Oil?

Last week at the IHS CeraWeek conference various attendees have reported that the former President said that the current delays in the permitting process were ridiculous at a time when the economy was still rebuilding. I picked up on Clinton’s comments while watching CNN’s “State of the Union.”

Thank you Mr. Clinton for stating what seems to be obvious to everyone but the people who matter - the government officials controlling the pace of permit approval.

Personally I’m way too familiar with how long it has taken for permitting to resume. I’ve been a shareholder of ATP Oil and Gas (ATPG) since late 2008 and have ridden a rollercoaster down through the credit crisis, up through a recovery, back down again after the BP oil spill and finally back up again through today.

I can’t say it hasn’t been financially rewarding as I’ve had several times to take a deep breath and average down at lower prices. But I can’t say it has been fun either as the drops have been shockingly fast.

My shareholding in ATP obviously makes me biased, but I really do think all you need is common sense to see that continuing to withhold permits is an overreaction.

Since offshore drilling began in United States waters in the Gulf of Mexico some 65 years ago there have been over 50,000 wells drilled. There was one significant oil spill caused by one company notorious for having a very poor safety record.

One well in more than 50,000. Realistically what are the odds of another similar spill occurring now when all companies involved are much more focused on the potential for such an event? Is a delay of almost a year in issuing permits related to a real concern over another spill or is it related to a political agenda?

On Friday BHP Billiton (NYSE:BHP) received the second permit that has been approved for a Deepwater well since last April. Still waiting though is ATP, which has at least 4 permits pending for drilling in the Gulf of Mexico Deepwater. Two at its Telemark hub and two at its Gomez hub.

As an ATP shareholder I’m actually a little worried about where in the drilling queue ATP is. The company has joined in a lawsuit to try to force approval of its permits, its CEO has written an open letter to President Obama and has also been fairly vocal in a couple of media outlets. These actions may not have put the company's permits on the top of the pile.

If there is any objectivity in the permit process, ATP should be receiving at least one permit fairly soon. Its drilling is about as low risk as it gets in the Deepwater. The company drills only wells into known reservoirs for development purposes. It's not exploration drilling where you don’t know what kind of pressures or reservoir you are dealing with. Combine this development drilling with the fact that ATP will be drilling its Telemark wells from the most modern and safe platform in the Gulf of Mexico (the “ATP Titan”) and the company really should be the poster boy for safe Deepwater drilling.

It surely is just a matter of time though, so I’ll try not to watch too closely and just enjoy that first permit when it eventually comes.

Disclosure: I am long ATPG.