BP Gets OK to Drill Deepwater Well off Shetland

BP has got a green light to drill a deepwater well off the Shetland Islands, the UK government said on Thursday, a move in line with Britain's plans to encourage more exploration in the North Sea.

The announcement came a day after the UK government's annual budget unveiled plans to boost investment in the North Sea, giving oil firms certainty on the level of tax relief they will receive when they dismantle pipelines and platforms and introducing new tax breaks for some projects.

Energy Minister Charles Hendry has given BP consent to drill the deepwater North Uist well, the Department of Energy and Climate Change (DECC) said in a statement.

The North Uist well in Block 213/25c is 125 km northwest of the Shetland Isles in a water depth of approximately 1,290 metres, the statement said.

"This consent is very positive news for the West of Shetland following the announcement in the budget aimed at increasing investment in this new frontier for oil and gas exploration," Hendry said in the statement.

He also said the department had "very carefully scrutinized" BP's plans and its emergency response measures.

"In accordance with DECC standard guidance as part of the assessment process, BP provided detailed confirmation that they have taken into account the findings and recommendations of the various Macondo investigation reports," the DECC said.

Earlier in March, BP struck a deal estimated at $7.8 billion with businesses and individuals suing over a massive spill from its Macondo well following the explosion of the Deepwater Horizon drilling rig in the Gulf of Mexico in 2010.

The company welcomed Thursday's approval.

"BP has applied lessons learnt from the Deepwater Horizon accident to its drilling organization and capabilities worldwide, and is applying them fully to the planning and drilling of the North Uist well," BP said in a statement.

"We are investing billions of pounds in the long-term future of our UK business, and exploration is an important part of this."

The well will be drilled by the Stena Carron, which BP said was "a state-of-the-art drillship".

Environment group Friends of the Earth Scotland said the approval was "extremely alarming" and that money should instead be invested in renewable energy.

"The expertise learned through years of offshore oil exploitation should be being directed to offshore renewables, rather than dangerous deep water drilling that risks lives and our environment," Stan Blackley, Friends of the Earth Scotland's chief executive, said.

Source: Reuters