NOIA asks MMS chief to issue guidance after permit recissions

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, June 8 -- The National Ocean Industries Association sent a letter on June 7 to acting US Minerals Management Service Director Robert V. Abbey urging him to issue guidance in the wake of MMS’s recent recissions of offshore drilling permit applications.

Recission of permits in less than 500 ft of water appears to signal a halt to drilling in shallow as well as deep water, causing extensive confusion in offshore industries, NOIA Pres. Randall B. Luthi said in the letter.

Luthi cited industry estimates that for each exploratory well idled in depths greater than 500 ft for 6 months under President Barack Obama’s order, up to 1,400 jobs are at risk and lost wages could reach $10 million/month/rig and up to $330 million/month for all 33 deepwater drilling platforms.

“Add to this the canceled leases in the western gulf, Virginia, and Alaska, and the potential for long-term job loss, economic hardship, increased dependence on foreign oil, and decreased energy security, and the negative impacts become national, not just regional,” said Luthi, who was MMS director from July 2007 to January 2009.

He asked Abbey to consider issuing guidance, possibly as a notice to lessees, outlining additional safety measures that US Interior Secretary Ken Salazar said will be needed so the agency can proceed with drilling permit applications or proposed exploration plans. “Such guidance should be timely, measurable, and achievable,” Luthi said.

It could include identifying and prescribing the use of best practices regarding fluid displacement, casing and cementing, casing installation procedures, and testing of cement and well integrity that are in use now, he suggested.

“Increased inspections and verifications of response plans are certainly steps that would allow drilling to resume in the very near future,” said Luthi. “You might also consider the establishment of a small panel of industry and government safety and well experts that could rapidly review and approve plans.”

Luthi said if Abbey considers issuing a rulemaking, NOIA encourages him to provide immediate interim guidance which would allow exploration and production during the rulemaking process.

“It is certainly a time for extreme caution and enhanced awareness of safety and well integrity, and those in the business are most keenly aware that drilling is not a matter to be taken lightly,” Luthi said, adding, “However, it is not a time for a lengthy and undefined ban or suspension on all drilling.”

Contact Nick Snow at nicks@pennwell.com.

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