Tapping New Ground Companies Hunt Oil, Gas Off Florida

PENSACOLA, Fla. – Oil companies once viewed drilling in the deep waters off Florida as cost prohibitive. Politicians feared even the slightest sign of support would be career suicide.

No more. Record crude oil prices are fueling support for oil and natural gas exploration off the nation’s shores. In Florida, movement was under way even before President Bush called on Congress in June to lift a federal moratorium that has barred new offshore drilling since 1981.

Early activity in Pensacola stems from a 2006 congressional compromise that allows drilling on 8.3 million acres more than 125 miles off the Panhandle – an area that had been covered by the moratorium, which was enacted out of environmental concerns. In exchange, the state got a no-drilling buffer along the rest of its beaches.

With gas topping $4 a gallon, recent polls show Americans are more supportive of drilling in protected areas. Some politicians – including Florida Gov. Charlie Crist – have switched sides.

“We think the public is way out ahead of the politicians on these issues,” said Tom Moskitis, a spokesman for the American Gas Association, a trade group.

Oil companies, driven by record energy prices, are more willing to risk $100 million or more to begin exploring new regions. The Interior Department estimates there could be 18 billion barrels of oil and 77 trillion cubic feet of natural gas beneath the 574 million acres of federal coastal waters that are now off-limits.

Drilling activity off the Flo-rida Panhandle has started and sputtered for decades. Some companies had leases to drill off the Panhandle before the 1981 moratorium. They were grandfathered in when the moratorium passed because they were already actively exploring. They continued activity into the early 1990s.

In March, four companies – Australia’s BHP Billiton Petroleum Deepwater Inc., Houston-based Anadarko E&P Co., Shell Offshore Inc. and Italian oil and natural gas company Eni SpA – bought leases on 36 Gulf of Mexicotracts under the 2006 compromise. Jeb Bachmann, an analyst with New Orleans energy consultant Howard Wiel, said the four understand the shifting political and financial realities.

“It gives you an indication that some of these companies believe there is some light at the end of the tunnel,” Mr. Bachmann said.

Anadarko bought seven of the recently opened tracts south of Pensa-cola because of their proximity to its Independence Hub, a major natural gas field off Alabama that supplies 1.5 to 2 percent of the natural gas consumed in the U.S. every day, said Stuart Strive, the company’s vice president of exploration for the eastern Gulf.

But finding and producing natural gas there will be expensive.

Three-dimensional mapping of the ocean floor, which must happen before any drilling, could take two years, Mr. Strive said. If a promising site is found, engineers must drill as much as three miles below the ocean surface to extract the oil or natural gas.

It will take years before the company begins producing anything at the site – and there is no guarantee of success.

Originally published by Associated Press.

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