Advertisement

Some deep-water gulf drilling allowed to resume

The Interior Department says companies can restart work at 16 wells but must meet new safety standards.

January 04, 2011|By Neela Banerjee, Washington Bureau

Reporting from Washington — In a move that could signal a long-awaited return to business as usual in the Gulf of Mexico, the Obama administration announced Monday that it would allow 13 companies to resume deep-water oil and gas drilling that was suspended after the Deepwater Horizon oil rig explosion last spring.

The administration had imposed a drilling moratorium after the April 20 accident at the BP well, which killed 11 workers and spewed millions of barrels of oil into the gulf in the country's worst offshore oil disaster.

The Interior Department lifted the moratorium in mid-October, but because drilling permits have been issued at a far slower pace than before the disaster, the administration has faced criticism from the oil industry, Gulf Coast politicians and residents that a de facto moratorium persisted.

After the moratorium was lifted, two companies received new permits, but for activities they could have done anyway under the suspension, an administration official said.

The oil and gas industry and its supporters have been waiting for permits for actual exploration and development. Monday's decision could clear the way.

Companies, including Chevron USA Inc., Shell Offshore Inc., Hess Corp. and Kerr-McGee Oil & Gas Co., will be allowed to return to 16 wells they were drilling in early 2010, nearly all of them exploratory.

"For those companies that were in the midst of operations at the time of the deep-water suspensions, today's notification is a significant step toward resuming their permitted activity," said Michael R. Bromwich, director of the Bureau of Ocean Energy Management.

The companies would have to adhere to new safety standards issued after the BP spill but would not have to undertake new environmental assessments required for drilling new wells.

An administration official said some companies had indicated that they might be able to start drilling as early as next week. About 30% of domestic oil production and 23% of gas production comes from deep-water wells.

The oil industry worries that permits for new deep-water drilling may not be issued until late this year at the earliest.

Some industry sources remained skeptical of the Interior Department, which they have come to view as an adversary since it tightened regulations.

They said the decision was a public relations ploy in response to a front-page report in the Wall Street Journal on Monday detailing the slowdown in deep-water drilling.

"The pattern we've seen again and again is that the administration makes an announcement when they're under the gun," an industry official said, "but then there's no change afterwards."

Reaction from the oil industry's political allies was also guarded.

"While we welcome, in principle, the administration's stated intent to put these 13 deep-water drilling operations back to work, I'm not yet convinced this is entirely good news for Louisiana's oil and gas industry," said Louisiana Sen. Mary L. Landrieu, a Democrat. "We need to know more about the conditions under which drilling will be allowed to resume and make sure those conditions don't actually undermine the intent."

neela.banerjee@latimes.com

Advertisement
Los Angeles Times Articles
|
|
|