May 9, 2013 2:30 pm
Shell plans to drill more than two miles underwater in the Gulf of Mexico in pursuit of new sources of oil and gas. If successful, the Guardian reports, the project will rank as the world’s deepest offshore facility.
The move is being viewed in the oil industry as a demonstration of Shell’s confidence that its technology can deliver returns on expensive and risky offshore projects, despite a recent downturn in oil prices.
Although BP recently put its Gulf of Mexico project—called “Mad Dog Phase 2″—on hold, Shell is not alone in its endeavors in the Gulf. ExxonMobil is planning a $4 billion project in the region, as well.
Shell’s executive vice president, John Hollowell, told the Guardian that the new project demonstrates the company’s ongoing commitment to meet U.S. energy demands. “We will continue our leadership in safe, innovative deepwater operations,” he said. The Guardian:
The move comes despite ongoing controversy over offshore exploration – especially in the Gulf of Mexico, where in April 2010 a fire and explosion on the BP Deepwater Horizon rig killed 11 workers and started a leak that took three months to cap. Last month BP said it had paid $25bn (£16bn) of the $42bn it has set aside to cover the damage caused by the spill.
Shell expects its new well to produce 50,000 barrels of oil per day once it reaches peak production. It estimates that the well, located in an oil field discovered eight years ago about 200 miles southwest of New Orleans, contains around 250 million barrels of recoverable oil total—just over three percent of the 6.9 billion barrels of oil the U.S. currently burns through each year.
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