Energy Exploration in Gulf at Standstill

Conflicting reports from the Obama administration and drilling companies in the Gulf region raise new questions of a de facto moratorium on shallow water drilling in the Gulf of Mexico that is still in place despite administration claims to the contrary.  

Both moratoriums in the Gulf are costing the region thousands of jobs.

Rep. Bill Cassidy (R-La.), a member of the House Natural Resources Committee, is demanding answers, seeking hearings on the Bureau of Ocean Energy Management’s (BOEM) permitting process for shallow water drilling when Congress returns for a lame duck session beginning November 15.

Cassidy says local energy companies report BOEM has issued only seven permits for their shallow water drilling since the administration claims to have resumed the permitting process on May 28. 

A reported one-quarter of the shallow water fleet is sitting idle while BOEM stalls the permitting process.

Drilling in shallow water was not a factor in the spill in the Gulf earlier this year.  The blowout preventers on these wells are located above water yet BOEM is dragging its feet on issuing the permits.

The formal hearing request to committee chairman Nick Rahall (D-W.V.) and ranking Republican Doc Hastings (R-Wa.):

Dear Chairman Rahall and Ranking Member Hastings:

I write to request that the Natural Resources Committee hold hearings to examine the Bureau of Ocean Energy Management’s (BOEM) permitting process for offshore oil and gas drilling when the House reconvenes in November. 

Following the Deepwater Horizon oil spill, shallow water permitting resumed on May 28, 2010.  Since then, I have heard conflicting accounts from offshore drilling operators and the Obama Administration about the progress – or lack thereof – of shallow water permitting and approval. 

Drilling operators report that since the moratorium on shallow water drilling was lifted, BOEM has only issued 7 permits for new shallow water wells.  Dozens of exploration and development plans, each covering multiple potential wells, are also awaiting approval from the agency.  As a result of this slowdown, 11 jackup rigs have been idled in the Gulf of Mexico, representing one quarter of the shallow water fleet.  Absent immediate action, the lack of permits for new wells could put 30 or more of the total 45 available rigs idle by the end of November.  The oil and gas industry is concerned that a de facto moratorium on shallow water permitting is in effect.

BOEM Director Michael Bromwich has defended the work of the agency, maintaining that no moratorium exists on shallow water activity, while noting that “we are not able to review and approve applications as expeditiously as we have in the past.”  He has stated that the lengthier permitting process of recent months reflects a necessary effort to require rig operators to prove that they are meeting improved safety procedures to prevent another major spill.

An independent analysis by the Associated Press found that “energy exploration in the Gulf’s shallow waters has come to a virtual standstill as drillers grapple with tougher federal rules since the spill. … The pace at which regulators grant drilling permits in water less than 500 feet deep has slowed sharply this summer… Just four out of 10 shallow-water drilling applications have been approved from June through August; 15 applications were sought and approved in the same period last year.”

These conflicting accounts merit consideration by the Natural Resources Committee, which can and should ensure that BOEM has the resources, focus, and sense of urgency to return to an active permitting process for Gulf energy production.  America’s energy security and tens of thousands of Gulf Coast jobs depend on it.