Salazar outlines specific legislative priorities for oil, gas

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, May 17 -- US President Barack Obama’s administration would like Congress to amend the 1920 Mineral Leasing Act to allow federal onshore oil and gas leases of less than 10 years in length, Department of the Interior Sec. Ken Salazar said on May 17. The administration also would like more time for DOI to review offshore permit applications, and generally supports proposals to extend deepwater leases that were suspended by the 2010 moratorium and to develop better coordination among agencies issuing permits, he told the US Senate Energy and Natural Resources Committee.

Emphasizing the importance of remembering lessons learned from the 5 million bbl oil spill following the Macondo well accident in the deepwater Gulf of Mexico on Apr. 20, 2010, Salazar said, “It is important to recognize that our policy in terms of supporting offshore oil and gas development, including the deepwater, has not changed. We are moving forward in the gulf and looking at other possible areas for development. We also are implementing regulations reflecting lessons we learned from the Deepwater Horizon accident and spill.”

But one Democrat on the committee questioned whether Interior and the US Bureau of Ocean Energy Management, Regulation, and Enforcement are moving quickly enough. Mary L. Landrieu (La.) noted that the 14 deepwater wells that have received permits since the moratorium ended all were being drilled before the Macondo well incident. Permits for entirely new wells haven’t been approved, and high gulf oil production rates will start to decline, she said.

Federal deepwater well permits are being approved at a rate of one every 4-5 business days since offshore producers demonstrated their capability of controlling and containing subsea leaks in February, BOEMRE Director Michael R. Bromwich said. That rate is not significantly different from before the accident and spill, but is being achieved with additional requirements for operators and more stringent reviews by BOEMRE, he observed.

Opposes House bill
Salazar said he does not support the bill that the House passed last week deeming an applicant’s offshore drilling permit approved if BOEMRE doesn’t reach a decision in a specified period. “I don’t think an extension to 90 days is significant because we need the time to review applications thoroughly,” he said. “No one wants a company to enter into an endless process that leads nowhere. Having a clear process is important. The reality is that 30 days is simply not enough time to either accept or reject a drilling permit application. We’re talking about a 90-day time frame to review an exploration plan to conduct the necessary scientific and safety reviews.”

Bromwich said, “Arbitrary time limits are a bad idea. Operators could submit applications they knew were deficient and simply run out the clock. Substandard applications would not satisfy requirements we have put in place.”

He said BOEMRE is looking at ways to make its permitting process clearer and more transparent to lease operators, including ways to let them know where their applications are in the permitting process and developing templates and check lists for them to use. The agency, which historically has been underfunded, finally got money to increase its workforce last month, he added.

Salazar said he supports provisions in S. 916 and S. 917, which committee chairman Jeff Bingaman (D-NM) introduced last week, that would codify administrative changes the secretary already has made at DOI. He said Congress needs to authorize creation of an Ocean Energy Safety Institute to keep DOI’s expertise on par with the oil and gas industry’s, and to phase out deepwater royalty relief provisions that are no longer necessary to stimulate exploration and production there.

“We still have a lot of work ahead of us,” he maintained. “There’s no doubt that the Deepwater Horizon incident awakened the nation on how we deal with offshore oil and gas. I’m proud of the work we’ve done, but there’s more work ahead.”

Contact Nick Snow at nicks@pennwell.com.

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