Chevron Sees Deepwater Drilling In Gulf Restarting Before Year End

HOUSTON -(Dow Jones)- Oil giant Chevron Corp. (CVX) said this week it expects the federal government to start issuing permits for deepwater drilling in the Gulf of Mexico, which will allow drilling to resume before the end of the year.

Gary Luquette, Chevron president for North America exploration and production, said in a webcast that the company is days away from complying with all the requirements set by the Bureau of Ocean Energy Management, Regulation and Enforcement, the U.S. government’s offshore-drilling regulatory branch.

One of the main issues delaying the permitting process is the requirement for companies to demonstrate they have the capacity to intervene and contain an oil spill in a very short period of time, Luquette said. He said Chevron–the largest lease-holder in the Gulf–and the energy industry have been working on some innovative solutions based on lessons learned from BP PLC’s (BP) Macondo oil spill last year.

“We are very close to getting to the end of having all questions answered and to the point where we are going to get that certainty,” Luquette said. “Chevron remains very bullish on the Gulf of Mexico.”

The executive also said the potential of a recent oil-and-gas discovery in Kern County, Calif., is not competitive compared with other options Chevron has in its portfolio.

“We have taken a look at what has been announced, what has been suggested is being the prospectivity and…we just don’t see that as being competitive,” Luquette said.

Chevron owns 20% stake in the California field, while Los Angeles-based Occidental Petroleum Corp. (OXY)–which made the discovery in 2009 – owns the remaining interest. Occidental estimated the field holds the equivalent of as much as 500 million barrels of oil equivalent.

-By Isabel Ordonez, Dow Jones Newswires

Updated: February 15, 2011 (Originally published February 11, 2011)

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