Oil drilling regulators could hasten industry return to deepwater operations

The Interior Department bureau charged with rethinking deepwater oil drilling regulation announced on Monday that it might speed resumption of offshore operations of 13 companies whose permits were suspended in April 2010, following the BP oil spill. Still unclear, however, is whether the companies can move immediately on the strength of their past permit applications, or whether they have to devote months to reapplying under new environmental rules.

The Bureau of Ocean Energy Management, Regulation and Enforcement on Jan. 3 released an issues notice elaborating on guidance published in December 2010 on what drilling companies must to do comply with new rules and reviews under the National Environmental Policy Act.

"Going forward, we are substantially enhancing our environmental reviews and analysis under NEPA," said BOEMRE Director Michael R. Bromwich. "But as we move forward, we are taking into account the special circumstances of those companies whose operations were interrupted by the moratorium and ensuring that they are able to resume previously approved activities."

The Obama administration, under political pressure to restore drilling rights to help with economic recovery of Gulf of Mexico states harmed by the historic spill, did not view the notice as a change in policy. "Yesterday's announcement provides a clarification on existing procedures for companies that were already drilling new wells when the moratorium was put in place," said BOEMRE spokeswoman Melissa Schwartz.

But an aide to Sen. Mary Landrieu, D-La., said the senator is concerned about the announcement's caveat that operators will be relieved of the obligation to revise a previously submitted exploration plan only if their numbers estimating the worst-case potential for oil discharge are lower than they were in their earlier containment plans. "If the worst-case discharge numbers now exceed those of their original plan, then they have to go back to the end of the line" of operators seeking permits, the aide said.

Though President Obama's moratorium on drilling was lifted in October, companies that have been submitting new applications for permits to drill in deepwaters have seen those applications returned by BOEMRE for reasons that need clarification, the Landrieu aide said. A company whose recalculated estimates of worst-case potential for an oil spill are higher than before might have to wait a year for a review under the new rules, the aide said.

David Pettit, a senior attorney with the National Resources Defense Council in Los Angeles, said the ruling is a "good thing" from the standpoint of the 13 companies. But they still would have to comply with new rules such as those requiring third-party safety certification and functioning blowout preventers, he noted. And if their plans' revised oil discharge numbers end up higher, "then it's back to the drawing board," Pettit added.

The 13 companies are: ATP Oil & Gas Corp.; BHP Billiton Petroleum Inc.; Chevron USA Inc.; Cobalt International Energy; ENI U.S. Operating Co. Inc.; Hess Corp.; Kerr-McGee Oil & Gas Corp.; Marathon Oil Co.; Murphy Exploration & Production Co.-USA; Noble Energy Inc.; Shell Offshore Inc.; Statoil USA E & P Inc.; and Walter Oil & Gas Corp.

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