Salazar: More work needed before deepwater drilling fully rebounds

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Mar. 2 -- The first successful demonstration of an offshore containment system let the US Bureau of Ocean Energy Management, Regulation, and Enforcement issue its first deepwater drilling permit since the Macondo well blowout and spill, but much more work needs to be done before new US deepwater drilling reaches previous levels, US Interior Sec. Ken Salazar said.

“I spent this past Friday in Houston watching a demonstration of the Helix system and was impressed with the progress we and the industry have made,” he told the US Senate Energy and Natural Resources Committee on Mar. 2.

“But there’s much more work to do,” Salazar continued. “The Marine Well Containment Co.’s system still has to be successfully demonstrated. “Both groups are still working on other key questions about their systems. We will continue to work with the industry to make sure that deepwater exploration and production will be safe and effective as it resumes.”

More permits will follow the one which BOEMRE approved on Feb. 28 for Noble Energy Inc.’s No. 2 well on its Santiago prospect in the Gulf of Mexico because templates are coming into place for well casing, cementing, and other deepwater systems, he told reporters following the hearing.

“I went to Houston because I wanted to know these containment systems are for real,” Salazar said. “I’m impressed with the work that’s been done, but I’m equally impressed with how much more needs to be resolved. Monitoring systems aren’t a part of blowout preventers at this point, for example.”

‘Interim phase’
“These containment systems are in their interim phase,” added Deputy US Interior Sec. David J. Hayes, who stood alongside Salazar as reporters questioned the two DOI officials. “We are working with the companies to improve them.”

Four multinational oil companies operating in the gulf formed MWCC after containment of the 5 million bbl spill from the ruptured Macondo well stem proved inadequate last year. Helix Energy Solutions Group Inc. began to work on a containment process with independent producers around the same time. That system, with enhancements Noble Energy supplied to allow deeper operation, was the one submitted and tested for the approved drilling permit.

The approval rate for subsequent deepwater drilling permits will partly depend on DOI’s final budget for fiscal 2012, Salazar told reporters. “If we don’t receive funding to do this safely, deepwater drilling in the gulf won’t return to previous levels as quickly,” he said. “Industry has stepped up to the plate, but more needs to be done before we reached the gold standard we both want for US offshore oil production.”

Regarding a federal judge’s order that BOEMRE start issuing 5 other drilling permits customers of Ensco International Inc. have requested, he said that he is not certain that the judge has jurisdiction in the matter and is considering an appeal. DOI also is preparing to be ready to reach decisions on the applications to comply with the order within its timeframe, Hayes said.

In his first appearance before the 112th Congress to discuss DOI’s proposed 2012 budget, the secretary said DOI aims to continue an oil and gas program that remains robust despite the deepwater drilling moratorium he imposed following the Macondo incident. The budget request aims to expedite offshore permitting while building safer management and stronger regulation. Onshore oil and gas goals also are robust, with the US Bureau of Land Management expected to issue 7,250 drilling permits during fiscal 2012, Salazar said.

Wild lands order
Responding to questions from committee members about his Dec. 23 order directing BLM to conduct inventories of its holdings to identify land with wilderness characteristics and manage them accordingly, he said: “From my point of view, it’s required by law.” The order does not usurp congressional authority to establish federal wilderness or wilderness study areas, Salazar emphasized. It protects existing rights with provisions that another multiple use purpose can override wilderness characteristics so impairment won’t occur, he said.

Salazar also defended a provision in the proposed budget which would impose a $4/acre fee on onshore leases where sufficient development has not occurred. Only 12.2 million of the 42.1 million acres which BLM has leased for oil and gas development are producing, he noted. “I realize it takes time to do seismic and other evaluations before going ahead,” he said. “We are considering this as we look at how these fees would be imposed.”

DOI officials also recognize that other federal agencies’ delays in issuing permits should be considering in deciding whether to assess such a “use-it-or-lose-it” fee, he continued. “A large percentage of this acreage has no activity whatsoever,” said Hayes. “Our intent is to get some going or return the land for leasing to other producers.”

Pamela J. Haze, DOI’s deputy secretary for budget, finance, performance, and acquisitions, said that the department is working with the White House Office of Management and Budget on draft lessee fee legislation. “The intention is to provide incentives, not punishment,” she told the committee.

The group is scheduled to testify about the proposed budget before the House Natural Resources Committee on Mar. 4 and the House Interior Appropriations Subcommittee on Mar. 9.

Contact Nick Snow at nicks@pennwell.com.

Related Articles

WAFWA: Aerial survey finds lesser prairie chicken population grew

07/06/2015 A recent range-wide aerial survey found the lesser prairie chicken population rose 25% from 2014 to 2015, the Western Association of Fish & Wil...

Buru awarded onshore Canning licenses

07/06/2015 Buru Energy Ltd., Perth, and Mitsubish Corp. have been granted two production licenses for Ungani oil field in the onshore Canning basin of Western...

Cenovus sells royalty business for $3.3 billion

07/06/2015 Cenovus Energy Inc., Calgary, inked an agreement to sell its wholly owned subsidiary Heritage Royalty LP to Ontario Teachers’ Pension Plan for gros...

CERI: Energy, operational efficiencies possible in Canadian oil, gas

07/06/2015 Measures can be taken by operators in the expanding resource-intensive Canadian oil and gas sector to improve both energy efficiency and operationa...

AGL Energy to scale back upstream gas operations

07/06/2015

Gas retailer AGL Energy Ltd., Sydney, says it will exit the oil business and massively scaling back its upstream gas operations.

Macondo settlement seen ‘positive’ for BP

07/06/2015 BP Exploration & Production Inc.’s recent agreement to settle federal and state claims related to the 2010 Macondo blowout and spill improves t...

Court to EPA: Costs matter

07/06/2015 Oil and gas groups did not respond immediately when the US Supreme Court ruled on June 29 that the US Environmental Protection Agency acted unreaso...

Innovation addresses US environmental regulations; more needed

07/06/2015 Technology spawned the recent boom in US oil and gas production which in turn led to new regulations that keep the environment and people safe.

Poor BIA management has hindered tribal energy development, GAO says

07/06/2015 The US Bureau of Indian Affairs does not have data it needs to verify ownership of some Indian oil and gas resources, easily identify resources ava...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

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
Available Webcasts


Operating a Sustainable Oil & Gas Supply Chain in North America

When Wed, Oct 7, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.

register:WEBCAST


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

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