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Post-Moratorium: Where Are the Drilling Permits?

Posted By Camilo Rodriguez On November 3, 2010 @ 12:00 pm In Energy | Comments Disabled

The deepwater drilling moratorium ended three weeks ago, but it could be months before the federal government issues its first new permit.

In a meeting last week with members of the National Ocean Industries Association, U.S. Bureau of Ocean Energy Management, Regulation, and Enforcement Director Michael Bromwich was vague when asked when his agency would issue a new deepwater permit. According to Oil & Gas Journal [1], he simply said he hoped it could happen before the end of the year.

Deepwater drilling permits came to a halt after the Deepwater Horizon explosion in the Gulf of Mexico on April 20. Interior Secretary Ken Salazar later imposed a moratorium on all deepwater drilling.

At the same time, the Interior Department’s permits for shallow-water drilling in the Gulf of Mexico slowed significantly — a drop of 53 percent compared to a year earlier.

The concern about deepwater and shallow-water permits prompted GNO Inc., an economic development agency serving the 10-parish New Orleans region, and other partnering groups to create a biweekly report called the Gulf Permit Index [2].

“The concern is that we still have a de facto moratorium,” said Michael Hecht, president and chief executive of GNO Inc.

The first Gulf Permit Index shows a substantial drop in the rate of new shallow-water permits being issued by BOEMRE. The federal agency, formerly the Minerals Management Service, is issuing 3.8 fewer shallow-water drilling permits per month since August than it was the year leading up to the oil spill, accounting for the 53 percent decline.

Meanwhile, no new deepwater permits have been issued since May. Prior to the spill, there was an average of 5.8 issued per month.

The lack of new permits is due, at least in part, to the new regulations that companies must meet in order to obtain them. “Operators who play by the rules and clear the higher bar can be allowed to resume,” Salazar said when the moratorium was lifted on Oct. 12 [3].

These new government regulations include having containment resources available in the event of a blowout, certifying that rigs have working blowout preventers and standards for cementing wells, and that the CEO of a company responsible for a well has complied with all regulations. Companies have applied [4], but are still waiting for drilling permits.

That has prompted concerns from even the Obama administration’s allies. Sen. Mary Landrieu (D-LA) said the decision to lift the ban, “is a good start, but it must be accompanied by an action plan to get the entire industry in the Gulf of Mexico back to work.”

Landrieu has held up the nomination of Jack Lew [5], the administration’s nominee to head the Office of Management and Budget, because of the drilling ban’s effect on the Gulf economy.


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URL to article: http://blog.heritage.org/2010/11/03/post-moratorium-where-are-the-drilling-permits/

URLs in this post:

[1] Oil & Gas Journal: http://www.ogj.com/index/article-display/1071355209/articles/oil-gas-journal/general-interest-2/government/2010/10/bromwich-plans_to.html

[2] Gulf Permit Index: http://gnoinc.org/news-events/gno-inc-unveils-oil-spill-economic-impact-study

[3] Salazar said when the moratorium was lifted on Oct. 12: http://www.doi.gov/news/pressreleases/Salazar-Deepwater-Drilling-May-Resume-for-Operators-Who-Clear-Higher-Bar-for-Safety-Environmental-Protection.cfm

[4] Companies have applied: http://www.rigzone.com/news/article.asp?a_id=100553

[5] held up the nomination of Jack Lew: http://tpmmuckraker.talkingpointsmemo.com/2010/10/administration_lifts_drilling_moratorium_landrieu.php

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