BOEMRE budget request grows amid cutbacks elsewhere in DOI

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Feb. 16 -- The US Bureau of Ocean Energy Management, Regulation and Enforcement would receive 50% more in fiscal 2012 than its enacted 2010 budget, which continued into 2011, under the Obama administration’s proposed federal budget. The increase, which contrasts with other US Department of the Interior agencies where funding would be cut, is designed to implement organizational and regulatory reforms following the 2010 Macondo well accident and massive crude oil spill into the Gulf of Mexico.

“This bureau has not had sufficient resources to provide an appropriate level of regulatory oversight of offshore oil and gas development. These shortcomings have become more pronounced as operations have moved into deeper and deeper waters,” BOEMRE Director Michael R. Bromwich said on Feb. 14 as the agency’s proposed budget was announced.

“The president’s budget request would, if enacted, provide us with the resources—including personnel, technical expertise, and equipment—needed to remedy that situation,” he continued. “We look forward to working with leaders in Congress to ensure that these critical resources are provided.”

Funding would be $358.4 million, which is $119.3 million, or 50%, more than its current annual budget, after adjusting for funding transferred to the US Interior secretary’s office as part of the ongoing reorganization of the former US Minerals Management Service. Interior Sec. Ken Salazar began the process soon after the Apr. 20 well blowout and explosion of the Deepwater Horizon semisubmersible rig and subsequent massive oil spill from the deepwater Macondo well, operated by BP PLC. One of his early moves on May 19, after renaming the agency, was to order the transfer of its revenue collection responsibilities to DOI’s Office of the Assistant Secretary for Policy, Management, and Budget. Bromwich was sworn in as its new director of June 21.

Further divisions
The additional requested resources would be used to complete BOEMRE’s transformation into two separate agencies: the Bureau of Ocean Energy Management, which will handle federal offshore leasing and environmental management, and the Bureau of Safety and Environmental Enforcement, which will concentrate on those regulatory responsibilities. Salazar and Bromwich have said the separation should be complete by Oct. 1, when Fiscal 2012 begins, ending the major organizational conflicts which characterized the agency when it was MMS. BOEMRE’s coastal impact assistance program is scheduled to move to another DOI agency, the US Fish and Wildlife Service, soon after.

Money from BOEMRE’s proposed budget also would be used to hire new oil and gas inspectors, engineers, scientists, and other key staff to oversee industry operations; conduct detailed engineering reviews of offshore drilling and production safety systems, and develop new risk-based inspections and safety oversight strategies, including the establishment of real-time monitoring of key drilling activities; and implement more aggressive reviews of company oil spill response plans, according to the agency. Additional resources would also facilitate the timely review of offshore oil and gas permits, it added.

It said funding increases would be partially offset by $65 million in inspection fees charged to offshore producers, an increase of $55 million over 2010 enacted levels. The fees would also apply to offshore drilling rigs for the first time. BOEMRE said that US President Barack Obama’s independent oil spill commission specifically recommended the use of industry fees in its January 2011 final report so that “[r]egulation of the oil and gas industry would no longer be funded by taxpayers but instead by the industry that is being permitted to have access to a publicly owned resource.”

That proposal quickly drew a protest from National Ocean Industries Association Pres. Randall B. Luthi, who warned that increased fees in US waters simply would drive offshore oil and gas investment and jobs elsewhere. “To imply that the offshore industry does not pay its fair share is simply untrue,” he said on Feb. 14. “It is worth repeating that oil and gas produced from the [US Outer Continental Shelf] provides significant revenue to the federal treasury in the form of bonus bids, royalties, rentals, and corporate taxes on overall earnings.” The offshore industry turns over almost 20% of its sales directly to the federal treasury as royalty payments, and pays corporate taxes on its overall earnings, he noted.

Luthi, who was MMS director from July 2007 to January 2009, said that offshore industries in 2008 paid $8.3 billion in royalties, $237 million in rent and $9.4 billion in lease bids. In 2010, the industry paid $4 billion in royalties, $245 million in rent, and $979 million in lease bids. The funding to restructure BOEMRE and to increase personnel could be more than covered by that existing revenue, he suggested.

“It is also ironic that the administration proposes a new fee to charge companies for not producing, while the agency itself is not producing the necessary permits for the companies to actually drill,” Luthi said. “The administration could generate much, if not all, of the requested revenue just by conducting offshore sales. We have gone from having at least two sales a year to possibly zero in 2011.”

Contact Nick Snow at nicks@pennwell.com.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


OGJ's Midyear Forecast 2015

When Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected