LONDON (Reuters) - The Gulf of Mexico oil spill is a potential “game changer” for oil supply, which could restrict future subsea oil development and limit supply, the International Energy Agency said on Thursday.
The disaster at the Deepwater Horizon drilling rig, operated by BP, would raise costs, delay new projects and bring a thorough review of offshore regulation, the IEA said.
“April’s sinking of the Deepwater Horizon drilling rig and the ongoing oil spill might ... prove to be a supply-side game changer,” the IEA said in its monthly Oil Market Report.
“Costs are going to go up, projects are going to be delayed and some sort of regulatory overhaul is likely in the United States in the aftermath of this terrible accident,” David Fyfe, head of the IEA’s oil industry and markets division, told Reuters Insider television.
Fyfe said the spill had “the potential to change the dynamic on the supply side of the equation” in the oil market.
The Paris based agency, which advises 28 industrialized countries, had identified between 100,000 and 300,000 barrels per day (bpd) of new projects that could be delayed by 2015 if there were an extended moratorium on new drilling.
U.S. President Barack Obama’s administration has ratcheted up demands that BP cover all costs stemming from the disaster, rising by the day and already estimated by the company to be around $1.43 billion.
“Emotion is understandably running high, and the way deepwater hydrocarbon developments are approved, operated and regulated will of course be thoroughly examined and potentially amended,” the IEA’s report said.
Procedures were already under review in the United States, UK, Norway, Brazil, Canada and China but changes to U.S. operations might not automatically be copied elsewhere, “nor necessarily imply a swansong for offshore expansion,” it said.
Britain implemented over 100 new maintenance and safety procedures after the 1988 Piper Alpha disaster in the North Sea, separating the regulatory functions of field licensing and operational safety and were followed later by other countries.
But despite major changes after Piper Alpha, scores of new offshore fields were developed in the subsequent decade.
Fyfe said he thought the U.S. authorities would adopt a measured response to the disaster:
“The United States is going to be reliant on oil for many, many years to come and therefore I don’t think there is any feeling that there is going to be any sort of blanket ban on the exploitation,” he said.
“As international companies are pushed to try to develop new resources in more and more remote and more technologically challenging areas, there is increasing risk and increasing cost,” Fyfe said.
“We need to think about ... our reliance on oil and whether by improving efficiency in the way we use oil we can limit the amount of new, ultra-difficult oil that companies are being required to tap.”
Additional reporting by Ikuko Kurahone and Darcy Lambton; editing by William Hardy