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U.S. lifts moratorium on deep-water drilling in Gulf of Mexico

Oil industry representatives, however, express concern that new, tighter regulations could slow the issuing of permits. Others oppose ending the suspension amid ongoing inquiries into the BP spill.

October 13, 2010|By Neela Banerjee, Tribune Washington Bureau

Reporting from Washington — The Obama administration on Tuesday lifted its moratorium on oil and gas drilling in the deep waters of the Gulf of Mexico, potentially blunting a serious political issue in the weeks before the midterm congressional election and signaling its confidence in newly tightened regulation.

"There has been significant progress over the last few months in enhancing the safety of future drilling operations, and in addressing some of the weaknesses in spill containment and oil spill response," Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, said in announcing the moratorium's end. "More needs to be done," he said, "but we believe the risks of deepwater drilling have been reduced sufficiently to allow drilling under existing and new regulations."

But the moratorium's end satisfied few players involved in offshore oil drilling issues. Some environmentalists criticized ending the drilling suspension while investigations and cleanup continued into the April 20 explosion of the Deepwater Horizon drilling rig, which killed 11 people and unleashed the biggest offshore oil spill in U.S. history.

Oil industry representatives and their congressional allies raised fears that the new, more stringent regulations the Interior Department has put in place could slow the issuing of permits and lead to a de facto moratorium.

"They miss the point: The issue isn't about a slowdown but a startup," said Jason Grumet, president of the Bipartisan Policy Center, a Washington research group that has advocated lifting the moratorium. "Interior, with a lot of input from the oil industry, has set up new regulations. Standing up that new architecture is a first step for government and industry, and it will take some time."

Interior Secretary Ken Salazar suspended deepwater drilling in May, and after a federal court threw out the ban, reissued a moratorium in July. The moratorium affected about 36 rigs in the Gulf of Mexico that were exploring new reservoirs of oil and gas in water deeper than 500 feet. Extraction of oil and gas in the gulf, which accounts for a third of domestic oil production, continued largely unabated.

At the time, the industry and Gulf Coast politicians warned that the moratorium would lead to an exodus of jobs to other oil-producing regions. Employment and rig losses turned out to be far less than predicted.

The end of the moratorium did not placate Sen. Mary L. Landrieu (D-La.), who said Tuesday that she would not lift her hold on the nomination of Jack Lew as the new head of the White House Office of Management and Budget, placed in protest of the drilling suspension.

Lew is "not connected to any facet of the moratorium" and his confirmation shouldn't be tied to that, White House Press Secretary Robert Gibbs said. The hold, Gibbs said, is "unwarranted and outrageous."

The oil industry and allies such as Landrieu said they wanted swift approvals for new deepwater permits so companies did not leave for other parts of the world. In the six months since BP's well blowout, 12 permits for drilling in shallow waters have been issued; before the accident, the Interior Department issued about 12 a month.

Critics of the Interior Department have asserted that it gave out permits far too easily before the Deepwater Horizon disaster. Oil industry representatives such as Erik Milito of the American Petroleum Institute, a trade group, declined to speculate whether industry members would like to return to the pre-disaster pace for the permit process, saying instead that enough had been done by the Interior Department to proceed fast now.

"I think we've had too much of a slowdown," said Milito, upstream director for the institute. "It makes sense to take a short pause, to analyze the regulations, and that was done with new requirements put into place."

In a telephone news conference, Bromwich acknowledged that the permit process would go more slowly, but he declined to estimate how long it would take. His agency has moved more than 20 employees from other departments to review permit applications, but it needed more inspectors for drilling rigs, Bromwich said. A $100-million request to fund greater oversight has stalled in Congress.

Some industry experts said that a slowdown was both expected and necessary after a disaster on the scale of the Deepwater Horizon and the ensuing regulatory reorganization, including the dismantling of the scandal-ridden Minerals Management Service.

Robert Bea, a professor at UC Berkeley's Center for Catastrophic Risk Management, worked in the oil industry and participated in the investigation of the 1988 Piper Alpha oil platform explosion in the British portion of the North Sea, which killed 167 workers. The British did not impose a moratorium but scrutinized "high risk" sites before issuing a transformative set of regulations in the early 1990s that the U.S. is studying.

"In fact there has to be a slowdown," said Bea, who serves on the Deepwater Horizon study group at Berkeley. "The back and forth between the regulators and operators, asking and answering questions, takes more time.... The benefit to slowing it down? It's not having black beaches and a dead environment."

neela.banerjee@tribune.com

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