Salazar lifts deepwater drilling moratorium"

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October 12, 2010

Salazar lifts deepwater drilling moratorium

Secretary of the Interior Ken Salazar has "determined it is appropriate that deepwater oil and gas drilling resume, provided that operators certify compliance with all existing rules and requirements, including those that recently went into effect, and demonstrate the availability of adequate blowout containment resources."

The American Petroleum Institute, said it was pleased that the moratorium has been lifted, but expressed concern today that a de facto moratorium could be created by delays in the processing and approval of permits.

"While we are pleased that the Interior Department has lifted the deepwater moratorium, even more needs to be done to get American workers back on the job of exploring for, developing and producing the oil and natural gas to fuel our nation's economy," said API President and CEO Jack Gerard:

"Without additional resources and a serious commitment by the government to process and approve permits and other requirements expeditiously, the moratorium will give way to a de facto moratorium, which will continue to cripple the already hard-hit Gulf region and cost more than 175,000 American jobs a year," warned Mr. Gerard.

"Our companies remain doubtful that this announcement is anything more than symbolic, until permits are actually issued for new drilling," said National Ocean Industries Association (NOIA) President Randall Luthi.

Jim Noe, Director of the Shallow Water Energy Security Coalition was also skeptical.

"We want to warn our deepwater colleagues that as soon as they try to pop the champagne, BOEM bureaucrats will be there to stick the cork back in the bottle," he said.

"Actions speak louder than words," continued Mr. Noe."Moratoriums can be lifted, but the administration must start issuing new permits before rigs can get back to work. The moratorium on shallow water drilling was lifted in May, yet five months later a de facto moratorium remains in place, shallow water rigs have gone idle, and 40,000 American jobs have been put in jeopardy. What we need is decisive action, not hollow pronouncements. BOEM has issued only 12 permits for new wells in five months, forcing a quarter of shallow rigs to go idle. Shallow water permits are stalled as the BOEM continues to ignore the fact that the low-risk wells involve mostly natural gas, with little oil spill risk and are drilled in mature, predictable and known reservoirs using rigs with blowout equipment sitting on the deck of the rig."

The Department of the Interior says that Secretary Salazar reached his decision after reviewing a report from Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEM) Director Michael R. Bromwich and considering other information on the progress of offshore oil and gas safety reforms, the availability of spill response resources, and improved blowout containment capabilities.

"In light of the Deepwater Horizon oil spill, we must continue to take a cautious approach when it comes to deepwater drilling and remain aggressive in raising the bar for the oil and gas industry's safety and environmental practices," said Secretary Salazar. "We have more work to do in our reform agenda, but at this point we believe the strengthened safety measures we have implemented, along with improved spill response and blowout containment capabilities, have reduced risks to a point where operators who play by the rules and clear the higher bar can be allowed to resume. 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."

"There has been significant progress over the last few months in enhancing the safety of future drilling operations, and in addressing some of the weaknesses in spill containment and oil spill response," said Director Bromwich. "More needs to be done - and more will be done to continuously improve the safety of deepwater drilling and to bolster the ability of the government and industry to respond in the case of a major blowout. But we believe the risks of deepwater drilling have been reduced sufficiently to allow drilling under existing and new regulations."

Secretary Salazar based his decision to lift the deepwater drilling suspensions on information gathered in recent months, including a report from Director Bromwich on October 1, that shows significant progress in reforms to drilling and workplace safety regulations and standards, increased availability of oil spill response resources since the Macondo well was contained on July 15 and killed on September 19, and improved blowout containment capabilities. Director Bromwich prepared his October 1 report and recommendations based on extensive public outreach and information gathering, including the eight public forums he held around the country to assess safety, spill response, and blowout containment issues

In his decision today, Secretary Salazar directs BOEM to require the following before approving drilling in deepwater that would have been subject to suspension under his July 12 Decision Memorandum:

Pursuant to applicable regulations, each operator must demonstrate that it has enforceable obligations that ensure that containment resources are available promptly in the event of a deepwater blowout, regardless of the company or operator involved. The Department of the Interior has a process underway regarding the establishment of a mechanism relating to the availability of blowout containment resources, and Secretary Salazar said he expects that this mechanism will be implemented in the near future.

That the CEO of each operator seeking to perform deepwater drilling certify to BOEM that the operator has complied with all regulations, including the new drilling safety rules.

Director Bromwich said that before deepwater drilling will resume, BOEM intends to conduct inspections of each deepwater drilling operation for compliance with regulations, including but not limited to the testing of BOPs.

In addition to the recently issued Drilling Safety Rule, Secretary Salazar said he anticipates the Department and BOEM will undertake further rulemaking that considers additional safety measures - such as redundant blind shear rams, remote activation systems for BOPs, and enhanced instrumentation and sensors on BOPs - to further enhance recent safety improvements. Future rulemakings may take into consideration information developed by ongoing investigations into the Deepwater Horizon oil spill, or as a result of public comments on the recently issued Drilling Safety Rule.


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