White House Lifts Ban on Deepwater Drilling

White House Lifts Ban on Deepwater Drilling
By PETER BAKER and JOHN M. BRODER
Copyright by THe New York Times
Published: October 12, 2010
http://www.nytimes.com/2010/10/13/us/13drill.html?_r=1&th&emc=th


WASHINGTON — The Obama administration lifted the moratorium on deepwater oil and gas drilling on Tuesday, but it will be weeks or months before drilling resumes while industry and government regulators scramble to meet strict new rules intended to prevent another disaster like the Deepwater Horizon explosion and spill.

The moratorium, imposed after the BP accident that killed 11 workers and spewed nearly five million barrels of oil into the Gulf of Mexico, was a blow to the oil industry and angered Gulf Coast communities dependent on offshore drilling for jobs and income. Lifting the ban mollified some of its sharpest critics, but the debate over the economic and environmental impact of oil development in the gulf continues.

The freeze was intended to address lax safety and environmental regulation that contributed to the BP crisis. Department of Interior regulators have written new protective measures that they believe will allow offshore operations to resume safely.

“We have made and continue to make significant progress in reducing the risks associated with deepwater drilling,” Secretary of the Interior Ken Salazar said in announcing the end of the moratorium. Therefore, he said, “I have decided that it is now appropriate to lift the suspension on deepwater drilling for those operators that are able to clear the higher bar that we have set.”

The new rules, issued by the Interior Department’s new Bureau of Ocean Energy Management, Regulation and Enforcement, tighten standards for well design, blowout preventers, safety certification, emergency response and worker training.

The bureau estimates that compliance with the added regulations will cost the deepwater industry $183 million a year, largely for changes in well design and the requirement that operators maintain subsea robots to operate blowout preventers in case primary control systems fail.

Although the suspension of the moratorium takes effect immediately, offshore operators will first have to submit new applications showing they have complied with the tougher rules and have their rigs inspected. Officials said they expect at least some of the rigs to be drilling again by the end of the year, although they are uncertain about when the first permit might be cleared.

“We are open for business,” Mr. Salazar said. Still, the opening of business may be delayed by a shortage of government manpower for reviewing applications and performing inspections, federal officials acknowledged.

The moratorium was scheduled to expire on Nov. 30, but the administration came under intense pressure to lift it sooner as companies began laying off workers, oil industry support businesses suffocated, and several rigs moved out of the gulf or were taken out of service. Two federal courts ruled that the moratorium was illegal, but it stayed in place as the government appealed the decisions.

Economists and oil industry supporters said the moratorium could cost billions of dollars in lost income and force thousands of layoffs. Yet the worst of the predicted economic impacts have not been felt, as oil companies have continued to pay their most valuable workers and the spill cleanup created thousands of temporary jobs.

The suspension affected 33 deepwater drilling rigs, but that number has shrunk to about two dozen now awaiting new permits to go back to work.

The initial reaction to the decision was mixed, with environmentalists saying it endangered the gulf and the oil industry complaining that the new rules mean the ban will effectively continue.

Senator Mary L. Landrieu, a Louisiana Democrat who has been among the most vocal critics, called it “a step in the right direction” but said the administration must speed the granting of permits and offer more clarity about the new rules.

Ms. Landrieu has single-handedly blocked Mr. Obama’s nomination of Jack Lew as White House budget director to protest the moratorium and said she would not release her hold yet. “When Congress reconvenes for the lame-duck session next month, I will have had several weeks to evaluate if today’s lifting of the moratorium is actually putting people back to work,” she said.

Robert L. Gibbs, the White House press secretary, called Ms. Landrieu’s continuing hold on Mr. Lew’s nomination “unwarranted” and “outrageous” and called on her to stop playing politics with the nomination.

Chris John, a former Democratic member of Congress who is now president of the Louisiana Mid-Continent Oil and Gas Association, a trade group, welcomed the decision but said he feared that a de facto moratorium would continue because of onerous new regulations and a shortage of government officials to process new drilling applications.

We had a disturbing experience in the shallow water where there was no moratorium, but some of the rules and regulations and bureaucracy caused the number of permits to plummet,” Mr. John said. Since the BP accident in April, only 12 new shallow-water permits have been issued; roughly that many were granted each month before the spill.

On the other side, Dan Favre, a spokesman for the Gulf Restoration Network, an advocacy group, condemned the administration’s decision, saying it “again puts the region at risk” and noting that the BP spill cleanup and restoration are not complete.

“While new rules to increase safety of drilling operations are welcomed, renaming a federal agency and creating a blueprint for safer drilling are not enough to ensure that the industry will actually follow the rules,” Mr. Favre said.

Michael R. Bromwich, th e director of the Bureau of Ocean Energy Management, which assumed the duties carried out by the former Minerals Management Service, led the effort to develop the new rules. He presented the regulatory framework to Mr. Salazar on Oct. 1, with a recommendation that the moratorium be lifted immediately.

In making that recommendation, he acknowledged that his agency lacks enough people to quickly review drilling applications and performthe detailed inspections required before new permits are issued. He also said that it would be useful to have more time to assemble the equipment and expertise needed to deal with any future major blowout and spill.

Yet he argued that the new rules provide a sufficient margin of safety and that it is worth the remaining risks to avoid further damage to the Gulf Coast economy.

The bureau has additional new regulations in the works beyond those it has already issued, officials said.

Mr. Bromwich said in a telephone briefing on Tuesday that it was not clear how long it will take energy firms to comply with the new rules and for his agency to act on them.

“It will clearly not be tomorrow, and it’s not going to be next week,” Mr. Bromwich said. He added, “My sense is that we will have permits approved before the end of the year, but how much before the end of the year and how many permits before the end of the year I can’t say.”



Peter Baker reported from Washington, and John M. Broder from Bloomington, Ind. Tom Zeller Jr. contributed reporting from New York.