Future of Smaller Offshore Drilling & Oil Companies Uncertain

Smaller oil companies could never handle the costs BP is paying out as a result of the Gulf oil disaster. Some smaller firms include:

Plains Exploration & Production Company
Noble Energy Inc.
Kerr McGee
Ocean Energy
Unocal
Cobalt International Energy
ATP Oil
Gas Corporation

[See list of Current Deepwater Operators]

Although a federal judge lifted the moratorium this week on drilling in deep water in the Gulf of Mexico, it will become more expensive and have much tighter regulations and some companies and investors will not think it is worth the effort. The rising cost of insurance premiums, longer estimated time frames for completing projects and the potential lifting of a $75 million cap on oil spill liability make the independents' role uncertain. Shareholders are not going to want small exploration and production companies in the deep water because it is cost-prohibitive and the risks are too great. (WSJ, 6/22/2010)