Salazar orders second deepwater drilling ban, with changes

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, July 13 -- US Interior Sec. Ken Salazar ordered a second deepwater oil and gas drilling moratorium based on drilling configurations and technologies instead of water depths. Suspensions will last until Nov. 30 and reflect a decision based on new evidence regarding safety concerns, blowout containment shortcomings, and strained spill response capabilities, he indicated.

“More than 80 days into the BP oil spill, a pause on deepwater drilling is essential and appropriate to protect communities, coasts, and wildlife from the risks that deepwater drilling currently pose,” Salazar said. “I am basing my decision on evidence that grows every day of the industry’s inability in the deepwater to contain a catastrophic blowout, respond to an oil spill, and to operate safely.”

Salazar said his order to Michael R. Bromwich, director of the US Bureau of Ocean Energy Management, Regulation, and Enforcement (BOE) does not cover deepwater production or shallow-water drilling, which uses different technology and can proceed if operators comply with all safety and environmental requirements, including seven that were implemented in a June 8 notice to lessees.

The decision covering operations using subsea blowout preventers or surface BOPs on floating facilities is supported by an extensive record of existing and new information indicating that allowing deepwater drilling to commence would pose a threat of serious, irreparable, or immediate harm or damage to the marine, coastal, and human environment, Salazar said.

This moratorium will give operators time to submit evidence that they can respond effectively to a spill given the unprecedented response and commitments following the Apr. 20 Macondo well blowout and rig explosion that led to the spill into the Gulf of Mexico, according to Salazar. It will permit assessment of wild well intervention and blowout containment resources to determine the strategies and methods by which they can be made more readily available should another blowout occur. And it will permit collection of key evidence regarding the potential causes of the Apr. 20 accident and spill, he said.

Industry responses
Oil and gas associations and other industry groups immediately criticized Salazar’s move. American Petroleum Institute Pres. Jack N. Gerard called it unnecessary and short-sighted.

“The 33 now-idle deepwater drilling rigs in the gulf have passed thorough government inspections and are ready to be put back to work,” Gerard said, adding, “The industry has been working extremely hard on all fronts to enhance safety—and will continue to do so. And the government has already imposed significant, additional safety requirements that are supported by the industry. A resumption of drilling would proceed only under the most intense and vigilant oversight.”

National Ocean Industries Association Chairman Burt Adams said the new moratorium leaves the door ajar for operators to resume drilling if they provide acceptable evidence that adequate containment and response capabilities are in place, but does not make clear what it would take to convince the Obama administration that this is the case.

It also does not mention the original moratorium, which is still being legally challenged, he added. “At least for the sake of some clarity, the administration should only have one moratorium in play at a time,” suggested Adams, who is chief executive of OGRS LLC, a Morgan City, La., oil and gas equipment rental company. “It’s the classic shell game. The administration keeps moving the shells around, only to reveal a new moratorium under the shell that is picked. However, in this case, there appears to be a moratorium under every shell,” Adams said.

Independent Petroleum Association of America Chairman Bruce H. Vincent, who also is president of Swift Energy Co. in Houston, noted: “Tens of thousands of good-paying American jobs are now in jeopardy because of this moratorium. It’s impossible to reconcile the fact that just last week, President Obama said that ‘We had to stop the freefall and get the economy and jobs growing again,’ and today his administration is once again taking such irresponsible measures that will lead to fewer jobs and rigs permanently leaving our seas, without adding any additional environmental benefit.”

Ignores rulings
“Unfortunately, the Obama administration is not getting the message when it comes to America’s energy and economic security,” said Karen A. Harbert, president of the Institute for 21st Century Energy at the US Chamber of Commerce. “Despite two federal court rulings halting the moratorium on deepwater exploration, [it] is now proceeding with yet another blanket moratorium that will continue to cost the gulf region much-needed jobs and America much-needed domestic oil and natural gas.”

Salazar noted that like the original moratorium, which a federal district court in New Orleans lifted on June 22, the new one applies to most deepwater drilling activities. It also establishes a process through which BOE will gather and analyze new information on safety and response issues which could potentially provide the basis for resuming certain deepwater drilling activities, he said.

He said he has also ordered Bromwich to engage in a public outreach effort with the oil and gas industry, academic experts, the public, and other interested parties, and to prepare a report with deepwater drilling recommendations.

“I remain open to modifying the new deepwater drilling suspensions based on new information,” Salazar said. “But industry must raise the bar on its practices and answer fundamental questions about deepwater safety, blowout prevention and containment, and oil spill response.”

Contact Nick Snow at nicks@pennwell.com.

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