DOI officials, shallow-water drillers differ on permit progress

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Nov. 23 -- Top officials from the US Department of the Interior and shallow-water drilling contractors emerged from a Nov. 22 meeting in Houma, La., with differing assessments of the US Bureau of Ocean Energy Management, Regulation, and Enforcement’s drilling permit process under new regulations outlined in a June 8 notice to lessees.

Interior Sec. Ken Salazar and BOEMRE Director Michael R. Bromwich said the agency is moving expeditiously. Jim Noe, executive director of the Shallow Water Energy Coalition, said shallow-water drilling contractors were disappointed that the federal government gave them no commitments.

Disappointed also was US Sen. Mary L. Landrieu (D-La.), who lifted the hold she had placed on a White House appointment protesting Salazar’s deepwater drilling moratorium after the secretary agreed to discuss offshore drilling permit delays with the drilling contractors.

“I’m extremely disappointed that Sec. Salazar’s presentation today failed to provide regulatory certainty and a clear path for speeding the process of issuing drilling permits,” Landrieu said. “Our industry leaders are skeptical and have every right to be. They received a commitment to the tiered permitting process, which is a start, but the Gulf Coast needs much more clarity and specificity to move forward.”

Gulf of Mexico oil and gas resources remain an important part of the US energy portfolio, but they must be developed safely and responsibly, Salazar said following the meeting. “I am encouraged that operators are moving quickly to comply with the higher standards for safety and environmental protection that we have set,” he said. “We will continue to work with the industry and stakeholders to provide certainty and ensure that everyone understands the rules of the road.”

‘Working expeditiously’
Bromwich said BOEMRE has been in frequent touch with industry and shallow-water drilling contractors since June. “Our ongoing discussions underline our commitment to working with industry to clarify any confusion in the federal regulations. BOEMRE is working as expeditiously as is safely possible on processing shallow and deepwater permits,” he said.

Bromwich noted that as of Nov. 22, BOEMRE has approved 16 new shallow-water drilling permit applications and 48 revised applications for permits for existing wells submitted since June 8. The revised applications included compliance information related to the drilling safety notice to lessees. Bromwich noted that currently there are four pending drilling permit applications for new wells and none pending for revised permits for existing wells.

BOEMRE has moved 20 employees internally and from other regions in the agency to assist with reviewing and process drilling permit applications in the Gulf of Mexico region on an interim basis, he continued. It also is awaiting congressional action on the Obama administration’s request for another $100 million to hire 24 more fulltime employees for the permitting process and for technology improvements to make it more efficient, he said.

Bromwich said following his recent five-campus recruitment tour, BOEMRE received 555 applications for about 30 petroleum engineering positions, 30 inspector positions, and 20 summer internships. “People are responding to our call to public service,” he said. “They understand the importance of our mission and want to be part of it, but we need to have sufficient resources to continue building our workforce. That will benefit both the public and the oil and gas operators who want their permit applications to be processed as quickly as possible.”

‘Uncomfortable choice’
Noe, who also is senior vice-president, general counsel, and chief compliance officer of Hercules Offshore Inc., said shallow-water drilling contractors appreciated Salazar, Bromwich, and Tom Strickland, assistant US Interior secretary for fish, wildlife, and parks, taking time to meet with them.

“However, we are disappointed that the federal government gave us no commitments at this meeting,” Noe said. “While candid discussions are important to frame the issues, unfortunately the time for discussion has passed for many of our most expert and productive drillers in the gulf. For them, the continual slowdown in permitting has gone situation critical, leaving them with the uncomfortable choice between economic ruin or leaving the gulf entirely for other regions of the world. In either case, American workers, businesses, and consumers are paying the price.”

Shallow-water drilling contractors remain committed to safe and responsible drilling standards and designs, Noe said. “However, the continued radical uncertainty over what is sufficient to meet new government pronouncements has slowed activities in the gulf’s shallow waters to a trickle,” he said.

In Washington, National Ocean Industries Association Pres. Randall B. Luthi, who ran BOEMRE’s predecessor agency, the US Minerals Management Service, from July 2007 to January 2009, said while Salazar’s willingness to meet with industry representatives was positive, “it will be his deeds, not his words, that will enable the offshore industry to return to work.”

He said, “Today, the secretary heard first-hand what inaction in Washington, DC, does to America’s workers. Ships, rigs, and vessels are idle. Workers are getting pink slips. They want to get back to work.”

Landrieu, meanwhile, said Louisiana’s congressional delegation has other tools at its disposal which it is prepared to use “to send the message that it is harmful to our economy and our national security to keep this industry in the dark and on the sidelines.”

She added, “We now have this administration’s attention, but the fight is not over. I will keep the pressure on President Obama, Sec. Salazar, and the rest of this administration until people in the gulf get back to work.”

Contact Nick Snow at nicks@pennwell.com.

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