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Deep-Water Drilling Moratorium Lifted Deep-Water Drilling Moratorium Lifted

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ENERGY

Deep-Water Drilling Moratorium Lifted

The ban ends more than a month early.

The Obama administration announced today it is lifting its six-month deep-water drilling ban more than a month early, but the oil and gas industry is not convinced that will do anything to help get current and new operations online. And the Interior Department isn't making assurances about how fast it will issue permits under new regulations.

"Without additional resources and a serious commitment by the government to process and approve permits and other requirements expeditiously, the moratorium will give way to a de facto moratorium," American Petroleum Institute CEO Jack Gerard said in a statement. He estimated that would cost more than 175,000 jobs a year in the Gulf of Mexico region. Gerard's concerns are echoed by Democratic and Republican oil lobbyists who worry new federal regulations could significantly delay permitting.

 

When asked today when the Interior Department would issue permits after the moratorium is lifted, Michael Bromwich, director of the Interior's Bureau of Ocean Energy Management, Regulation, and Enforcement, did not know. "Any answer I would give would be a guess," Bromwich said at a Platts energy discussion. "I want to be a little careful about what kind of guess I give you."

He said companies must submit permit applications adhering to the more stringent regulations the department recently announced. And after that, employees in his bureau must approve those applications, which Bromwich estimated could take two to three weeks or longer. "We're going to have to do inspections on platforms before we can give a go-ahead for deep-water drilling to resume," Bromwich said. "It will take us some time to review the application."

Bromwich and Interior Secretary Ken Salazar have lamented that the department is lacking the funds and personnel to adequately inspect and oversee the offshore drilling operations in the gulf. To that end, they have requested more than doubling their funding to $100 million.

 

Salazar preemptively commented on the expected response from the oil and gas industry in a conference call this afternoon. He noted that certain people will say the new rules are "too onerous or [the] bar is too high. They are the same people who have long fought to weaken regulation and oversight to the oil and gas industry," Salazar said. "... They want us to ignore the new reality and go back to the business as usual, but that is simply not an option."

He also tried to head off criticism from environmental groups who want the ban to remain. Salazar said risk can't be eliminated and the country must continue to drill for oil given its importance to the economy.

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