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Oil companies adjust to new landscape

Jeremy Hobson Oct 13, 2010
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BILL RADKE: Now that the Obama Administration has lifted the moratorium on deepwater drilling in the Gulf of Mexico, the oil industry may be able to hire back some of the thousands of people who have been unable to work in the region for several months. But with tougher rules and regulations now in place, the industry may end up looking quite different.

Marketplace’s Jeremy Hobson reports.


JEREMY HOBSON: For one thing, smaller offshore drilling companies may not be able to survive.

Fadel Gheit is managing director of oil and gas research at Oppenheimer and Company. He says after the BP spill, the cost of an accident is too daunting for the little guys.

FADEL GHEIT: Which basically is going to limit the number of players to those who have the financial flexibility to absorb any future shock.

That, he says, means deepwater drilling in the Gulf will be limited to a handful of companies — Shell, Chevron, Exxon Mobil, Conoco Phillips, and good old BP. Gheit says some companies are already adjusting to the new landscape, putting their money into on-shore drilling, which is seen as safer.

GHEIT: But nevertheless, most of the mega projects will be offshore in the deepwater.

But don’t expect the rigs to be up and running right away, though. Even though the Obama administration decided yesterday to lift the ban earlier than expected, analysts say it’ll take weeks for companies to get in compliance with new regulations.

In New York, I’m Jeremy Hobson for Marketplace.

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