Fallout from the drilling moratorium in the deepwater Gulf of Mexico (GOM) could last more than a year, Royal Dutch Shell plc CFO Simon Henry said Thursday. He noted that Shell is taking a $59 million charge against its 3Q2010 results because of the moratorium.
"The moratorium and the delay to our drilling program is an opportunity lost for Shell," Henry said. "We have seen 230,000 boe/d of production in the Gulf of Mexico in the first nine months of this year. That is 10,000 boe/d lower than it would have been without the moratorium.
"And although that moratorium has been lifted, we expect a knock-on effect on future production because of the drilling delays we have had this year."
In 2011, Shell now expects to produce around 220,000 boe/d in the GOM, which is "around 40,000 boe/d below the plans that we previously set before the moratorium was put in place," he said. "There could be further impacts in 2012."
Shell has available rigs and equipment that should meet the new regulatory requirements imposed by the Bureau of Ocean Energy Management, Regulation and Enforcement, but everything remains on hold, said the CFO.
Outside of the GOM, however, Shell reported strong earnings in 3Q2010 and a 5% uptick in production year/year.
Profits were up in the latest quarter by 18% year/year to $3.5 billion. Shell uses a current cost of supplies base, which removes the effect of price changes on inventories. The underlying result, which strips out one-time charges, was up 88% from 3Q2009.
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