Interior Secretary Ken Salazar said on Monday that approval for an exploration plan submitted by Shell Offshore Inc. hinged on the company's ability to demonstrate that it could contain a deepwater well blowout and pass an environmental assessment.
The offshore drilling industry "has made significant progress on oil containment systems," Salazar said during an afternoon press conference. Groups of drilling companies have developed two undersea containment systems of valves and pipes that can be lowered onto a blown-out well to contain the escaping oil.
Approval of the exploration plan does not mean that Shell can begin to drill immediately. It now must apply for separate drilling permits. Rather, the exploration plan spells out in detail where the company plans to explore, what drilling vessels it plans to use and how it plans to meet safety and environmental standards.
Shell plans to drill three exploratory wells in 2,950 feet of water about 130 miles off the Louisiana coast.
"Protection of people and the environment is fundamental," Salazar said. In the aftermath of the Deepwater Horizon spill, the nation's worst, the Interior Department created two new agencies to oversee offshore drilling safety -- the Bureau of Ocean Energy Management, Regulation and Enforcement, or BOEMRE, and the Bureau of Safety and Environmental Enforcement.
The agency also wrote tougher environmental regulations that have substantially slowed the process for issuing drilling permits. That has prompted loud complaints from the drilling industry and accusations from its allies in Congress that the Obama administration had imposed a "de facto moratorium" on deepwater drilling in the Gulf.
But Michael Bromwich, BOEMRE director, said on Monday that Shell's successful completion of an exploration plan demonstrates that oil and gas companies can meet the new, higher environmental and safety standards.
As for how his agency can effectively evaluate untested oil containment technology, Bromwich said it used "an analytic tool developed by us and industry."
Since new environmental regulations were announced last June, Salazar said, the Interior Department has approved 38 drilling permits for shallow water and three for deep water. Thirteen more deepwater permits are pending, he said.
Approval of Shell's exploration plan "is certainly welcome news for the offshore industry," said Randall Luthi, president of the National Ocean Industries Association. "This decision is a huge first step in a process which we hope will successfully lead to new operations and a rapid return to work for the thousands of people employed by our member companies."