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ATP Oil To Explore Near New Israeli Megafields

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March 01, 2011 – Comments (1) | RELATED TICKERS: ATPAQ , NBL , APC

Mar. 1 2011 - 6:56 pm 

Christopher Helman at Forbes

“It’s nice to be working with a government that understands the importance of domestic energy security,” says T. Paul Bulmahn, chief executive of ATP Oil & Gas. He’s referring to Israel, where ATG is ironing out the terms of a deal to explore offshore in one of the world’s hottest new natural gas regions.

Going overseas wasn’t Bulmahn’s first choice and he’s sad that he’ll be hiring new engineers in Tel Aviv instead of Houston. “I’m an American first. it’s not where we need to be for our own country’s interest,” he says. But he didn’t see much choice: “I don’t want us ever to be victimized again.”

He’s not overstating it. When BP’s blowout occurred last year ATP Oil & Gas had 10 permits outstanding to drill wells and lay pipelines in the gulf. It was also in the process of completing and installing two $600 million platforms to produce oil and gas from new deepwater fields. Chief Executive T. Paul Bulmahn says ATP had been on track to double its oil and gas production to 50,000 bpd within a year.

But since then, Bulmahn’s been stuck. No permits, no drilling. Though ATP was on the short list of companies that the Bureau of Ocean Energy Management said in January were close to getting permits, it was Shell Oil and Noble Energy that got the nod Feb. 28 to resume work.

Like them, ATP isn’t looking to start a new well, just drill a new branch off of an existing one. “It’s exceedingly frustrating,” says Bulmahn. “What’s being done now under the guise of an emergency which has already passed is not fair.”

What galls him the most is that ATP, being a smallish company ($800 million market cap) has always been rabid about safety. Its new Titan, designed three years before BP’s mess, features “triple redundancy” in protecting against blowouts and spills. Similar to the new systems deployed by a Big Oil consortium last month (see: New Deepwater Containment System Ready To Go), it features a blowout preventer and containment cap at the seafloor and another blowout preventer above the water on the bottom of the  platform. Titan, the first deepwater platform ever to be built in the U.S. with American labor, exceeded safety requirements then and now.

Bulmahn had been holding out hope that the administration would see that ATP could be trusted to drill again. In December he sent a letter to the White House. It read: “Please Mr. President, give ATP a permit to return to work rather than forcing more American jobs to be lost.” In January, after the holidays, Bulmahn had no choice but to lay off half of ATP’s 200 drilling contractors. Delays have been costing ATP $300,000 a day.

Dealing with tough situations is nothing new for Bulmahn. When he was a kid in rural Texas his family of seven sharecropped a garden down the road from their home. Because they didn’t have enough land for cows, they raised goats and made decent money selling their easily digestible milk to the lactose intolerant. “Instead of letting things happen or being a victim of society we made things happen.”

No different now. As soon as the deepwater moratorium was put in place Bulmahn set about looking for options. To ease ATP’s debt load he spun off Titan as a subsidiary and borrowed $350 million against it. More importantly, he began looking all around the world for countries “that are desirous of developing their offshore resources, desirous of our expertise, and which would prefer to work with a smaller company like ours that may not have entanglements in other countries.”

That expertise has proved a perfect match for Israel, where in late February Bulmahn announced a deal for ATP to explore near the recent offshore discoveries Leviathan and Tamar, which appear to hold enough natural gas to grant Israel decades of energy independence. ATP is currently in the running for as many as five licenses to explore and develop an area believed to have as much as 25 trillion cubic feet of natural gas (see: Leviathan Field Could Sustain Israel For Decades).

Bulmahn can’t yet say who ATP’s partners will be or how much he expects to invest in Israel, but a good bet is that he’ll be partnering with Noble, which discovered Leviathan and Delek, controlled by Israeli billionaire Yitzhak Tshuva. Bulmahn expects the region to soon eclipse the Gulf of Mexico and North Sea when it comes to tallying ATP’s reserves.

Bulmahn knows full well that America can’t afford a brain drain of oil and gas talent, but that’s what it’s going to get if the administration doesn’t return some normalcy to its permitting process soon.

“For America to be great we need an abundance of energy, of all kinds, not just oil and gas. We need nuclear and solar and windpower and biomass,” says Bulmahn. “We need them in abundance and we need them cheaply to be able to continue to grow our great country and make it greater than it is now.”

1 Comments – Post Your Own

#1) On March 01, 2011 at 10:30 PM, Momentum21 (82.23) wrote:

I love this stock even though it has caused a few sleepless nights for me last year. 

I like this Forbes article although it really only means something if they bring their GOM stuff online sooner than later.   

More news here  that is probably more material to the short term. 

THE ASSOCIATED PRESS

NEW ORLEANS -- The federal judge who overturned the Obama administration's moratorium on deepwater drilling after the Gulf oil spill ordered federal regulators on Tuesday to act on two more drilling permit applications.

U.S. District Judge Martin Feldman ruled last month that the Interior Department must act within 30 days on five pending permit applications. On Tuesday, Feldman said his ruling also applies to two applications submitted by Houston-based ATP Oil & Gas.

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