Oh, goodie, more drilling

John Broder and Clifford Krauss have an article in The New York Times about the resumption of deep-water drilling in the Gulf:

The Interior Department said that it had approved the first new deepwater drilling permit in the Gulf of Mexico since the BP explosion and spill last spring, a milestone after a period of intense uncertainty for industry and a wholesale remaking of the nation’s system of offshore oil and gas regulation.
Michael R. Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, said that Noble Energy had been granted permission to resume drilling in 6,500 feet of water off the coast of Louisiana.
Work on the well was suspended, along with virtually all other drilling activity in water deeper than 5,000 feet, immediately after the Deepwater Horizon accident last April. The disaster killed eleven rig workers and spewed nearly five million barrels of oil into the ocean.
Still, there was no indication that drilling in the gulf would return anytime soon to levels preceding the BP well blowout.
Mr. Bromwich made clear that each new permit would be closely reviewed on a well-by-well basis and that the old system of rapid approvals of drilling permits had been permanently changed. Noble Energy said it expected to resume drilling by late March.
Approval of the Noble Energy application comes as oil prices are rising in response to unrest in the Middle East and North Africa and many in Congress and in industry are complaining of burdensome rules that are thwarting the development of domestic energy resources.
The interior secretary, Ken Salazar, plans to testify before Congress this week in defense of his department’s budget, and is certain to face harsh questioning about why it has taken so long to resume drilling in the gulf.
Judge Martin Feldman, of the United States District Court for the Eastern District of Louisiana, recently ordered the Obama administration to move quickly on permits for new deepwater wells in the gulf, saying that the continuing delays were “increasingly inexcusable”.
But, in a conference call with reporters, Mr. Bromwich said that there were “absolutely no politics associated with the approval of this application”. He also said that the decision to grant Noble Energy the drilling permit was not a response to Judge Feldman’s order; he said the department disagreed with the ruling and was preparing a legal response.
It is not clear how quickly federal regulators will move on the six pending deepwater drilling permits, or how soon the normal flow of applications will resume after a nearly yearlong halt to deepwater activity.
“We are taking these applications to drill as they come in,” Mr. Bromwich said. “Industry has been waiting for signals that in fact deepwater drilling will be allowed to resume and many will take this as that signal. I have no idea how quickly new applications to drill will be filed,” he added. “I have no idea how long it will take to approve the next one or the next one after that or the next one after that.” Mr. Bromwich noted that Noble’s permit was the first in deep water since the BP accident, but that 37 shallow-water applications had been approved over the last ten months. The decision was cautiously welcomed by the oil industry.
Gary Luquette, president of Chevron’s North America exploration and production, called the permit “a step in the right direction”. But, he added: “It is time for the government to clear the backlog of deepwater drilling permit applications so industry can create the energy, jobs and economic growth our nation needs so badly.”
Lee Hunt, president of the International Association of Drilling Contractors, said the industry was seeking clarity on the pacing of additional permits. “A permit for any well prohibited by the moratorium represents progress,” he said. “The question now is how quickly will they proceed to approve other permits that are awaiting approval.”
Mr. Hunt said that six deepwater permits were awaiting federal approval and that the industry could put 33 projects back in operation if companies could obtain permits.
At least six rigs affected by the drilling moratorium, imposed last June, have left the gulf to drill elsewhere.
Mr. Bromwich said that Noble had met new safety and environmental rules that were put in place after the spill, and had a contract with a company that was capable of capping a blowout and handling a discharge of as much as 69,000 barrels a day, roughly the same volume of oil that leaked from the crippled BP well for nearly three months. The emergency well-capping system will be furnished by the Helix Well Containment Group, which Mr. Bromwich said was capable of meeting the government’s spill response requirements for the Noble Energy well.
Mr. Salazar and Mr. Bromwich were briefed in Houston by Helix executives and representatives of another group developing a new oil spill response system. The second group, a consortium of Exxon Mobil, Chevron, Shell, ConocoPhillips, and BP, has developed a system meant to cap a well in up to 8,000 feet of water and collect 60,000 barrels of spilled oil a day.
The consortium is also working on a second system that by the end of the year will be capable of operating in up to 10,000 feet and contain 100,000 barrels a day.
Randall B. Luthi, former director of offshore drilling regulation at the Interior Department and now president of the National Ocean Industries Association, a drillers’ trade group, said the approval came at a critical moment. “With all the world-complicating factors, including rising oil prices, political turmoil in the Middle East and the loss of jobs in the Gulf of Mexico, this decision offers hope,” he said.
Jack Gerard, president of the American Petroleum Institute, sounded a less magnanimous note: “This slow-moving process continues to stifle domestic production and puts thousands of jobs at risk in the gulf and around the country,” he said.
Senator Mary Landrieu, the Louisiana Democrat who has pressed the administration to begin issuing deepwater permits at a steady clip, called the permit “long overdue”, adding: “I hope that this permit is the first of many to come, and I will continue to use every lever at my disposal to ensure that it is.”