Hastings plans to offer bill to get gulf 'back to work'

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Mar. 16 -- US House Natural Resources Committee Chairman Doc Hastings (R-Wash.) said he will introduce legislation “to put the Gulf of Mexico back to work” as he opened a hearing on community and economic impacts of the Obama administration’s new offshore oil and gas policies and regulations.

“Since last April, only 37 shallow-water permits and only 2 deepwater permits have been issued,” Hastings said. “For months and months, permits have lingered at the [US Department of the Interior] without action. Those who were actively drilling before the Deepwater Horizon disaster were shut down and [DOI] won’t allow them to get back to work. This is unacceptable.”

He also noted that a federal district judge has held DOI in contempt for not acting on drilling permit applications and ordered decisions to be made, and that the administration is spending time and money on appeals instead of moving forward. Hastings said he will introduce one bill to put producers back to work in the gulf, as well as a second to reopen other areas of the US Outer Continental Shelf which the administration has closed.

The bills will move through the Natural Resources Committee, he indicated. “The Obama administration seems unmoved by thousands of lost jobs, rapidly rising gasoline prices, and the threat these prices pose to our economy, but this committee will not sit idly by,” Hastings said.

Adverse impacts from the administration’s policies since the Macondo well accident and subsequent gulf oil spill have been substantial, witnesses told the committee. “Seven deepwater rigs already have left the gulf since the original moratorium was declared, and more may leave if permitting continues at a pace too slow to support keeping them in the gulf,” said Scott A. Angelle, secretary of Louisiana’s Department of Natural Resources.

$400 million loss
Hastings said Shell Oil Co. has maintained its offshore fleet despite the rigs being mostly inactive, and has lost $400 million already because it hasn’t been able to obtain permits. Angelle said that the producer told Louisiana’s DER it still considers its gulf prospects exciting and valuable, but added that it would not be able to keep its fleet idle there indefinitely. “The longer the slowdown goes on, the more chance that deepwater rigs will be increasingly committed to other parts of the world,” he warned.

Samuel A. Giberga, senior vice-president and general counsel of Hornbeck Offshore Services Inc., disputed administration statements that there is not a de facto offshore drilling moratorium. Only two permits have been issued to resume deepwater drilling and shallow-water drilling activity has been severely curtailed since US Interior Sec. Ken Salazar imposed his first moratorium in May, he told the committee.

“This industry supports 150,000 high-paying jobs. At least 8,000 jobs have already been lost and more layoffs are being made each week,” said Giberga, who also testified on behalf of the Offshore Marine Service Association. “Seahawk Drilling, the second-largest shallow-water drilling company in the gulf, declared bankruptcy a few weeks ago for one overriding reason: a lack of drilling permits. Bear in mind, Mr. Chairman, that Seahawk drills only in the gulf’s shallow waters and had nothing to do with the Deepwater Horizon spill.”

Texas Railroad Commission Chairwoman Elizabeth Ames Jones urged the federal government to look to producing states’ models as it revamps its policies. She said the Texas regulatory agency’s charter encourages it to work with citizens and producers to responsibly produce as much of the resources in the state as possible to keep public schools funded and the state’s budget balanced.

The US Bureau of Ocean Energy Management, Regulation, and Enforcement’s mission of managing federal offshore energy resources and to enhance public and trust benefits, promote responsible use, and realize fair value, Jones said, adding, “While these charges are admirable, the charge to manage mineral resources, rather than to prevent the waste of mineral resources, results in two very different approaches and outlooks.”

Contact Nick Snow at nicks@pennwell.com.

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