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Gulf drilling ban lifted if you 'play by the (new) rules'

The Obama administration on Tuesday lifted the moratorium on deepwater exploratory oil drilling in the Gulf of Mexico — provided companies follow new rules.
Image: Transocean's ultra-deepwater drillship Discoverer Inspiration in the Gulf of Mexico
Exploratory deep-water drilling is a major part of Gulf of Mexico oil development. The post-BP spill moratorium idled drillships like this one, the Discoverer Inspiration. Nearly as big as an aircraft carrier, it can operate in waters up to 12,000 feet deep and drill wells at a total depth of 40,000 feet.Melissa Phillip / Houston Chronicle via AP
/ Source: news services

The Obama administration on Tuesday lifted the moratorium on deepwater exploratory oil drilling in the Gulf of Mexico — provided companies follow new safety rules.

"Operators who play by the rules and clear the higher bar can be allowed to resume" drilling, Interior Secretary Ken Salazar said at a news conference.

One of those new rules is that the CEO of a company responsible for a well must certify it has complied with all regulations. That could make the person at the top of the company liable for any future accidents.

"The oil and gas industry will be operating under tighter rules, stronger oversight, and in a regulatory environment that will remain dynamic as we continue to build on the reforms we have already implemented," Salazar said.

The industry as well as many lawmakers had pressured the Interior Department to lift the ban — which was imposed on May 28 as a result of the BP disaster — on grounds it has cost jobs and damaged the economy. The moratorium had been set to expire Nov. 30.

The ban did not stop oil production, just the drilling of exploratory wells for eventual production.

The administration in recent weeks has announced new rules to make offshore drilling safer, and the Interior Department said companies will have to prove they have those steps in place to contain a worst-case spill scenario.

Each operator will have to have containment resources available in the event of a blowout like the Deepwater Horizon accident that sent more than 4 million barrels of oil into the Gulf of Mexico.

Other rules enacted since the BP spill include requirements that rigs certify they have working blowout preventers and standards for cementing wells. The cement process and blowout preventer both failed to work as expected in the BP spill.

Louisiana Sen. Mary Landrieu, a Democrat, applauded the lifting but said "it must be accompanied by an action plan to get the entire industry in the Gulf of Mexico back to work."

She called on the administration to accelerate permit approvals for drilling in shallow and deep water and provide greater certainty about regulations industry must meet.

Environmentalists, on the other hand, were upset.

"This is pure politics of the most cynical kind," Greenpeace USA Director Phil Radford said in a statement. "It is all about the election season, not safety and environmental concerns."

Interior had earlier warned that even when the ban is lifted, drilling is unlikely to resume quickly because of the need for more inspections and compliance with new regulations.

Michael Bromwich, head of Interior's Bureau of Ocean Energy Management, said it would take "at least a couple of weeks" before permits are approved.

Companies, for their part, said they still need more clarification.

Todd Hornbeck, CEO of Covington, La.-based Hornbeck Offshore Services, said lifting the moratorium would leave the industry in a "de facto moratorium stage" until the government fully explains how new drilling permits will be issued.

"We're still in the dark," said Hornbeck, who heads up one of the companies that sued to block Interior's initial moratorium. His company provides vessels and other services for the offshore industry.

"The devil is in the details, as they say, and the industry hasn't seen the final requirements for what we would have to do to be able to actually get a permit issued," he added. "Until that is done, lifting the moratorium may be just a moot or perfunctory act. ... Right now, I'm skeptical that it will be anytime soon that permits will be issued even if the moratorium is lifted."

The administration has said the moratorium was necessary to ensure safety after the April 20 blowout of BP's Deepwater Horizon well.

But oil companies and Gulf state lawmakers attacked the moratorium as too broad and damaging to the region's economy.

A federal report said the moratorium likely caused a temporary loss of 8,000 to 12,000 jobs in the Gulf region.

Salazar said he knows that some people will say the new rules are too onerous.

"Others will say that we are lifting the deep water drilling suspension too soon. They will say there are still risks involved with deep water drilling," he said.

The truth is, there will always be risks involved with deepwater drilling, Salazar said. "As we transition to a clean energy economy," he added, "we will still need oil and gas from the Gulf of Mexico to power our homes, our cars, our industry."