[StBernard] Obama to Reopen Oil Drilling

[Westley Annis]

Obama to Reopen Oil Drilling 
New Rules on Shallow-Water Exploration Expected as Economic Woes 
By LAURA MECKLER And JONATHAN WEISMAN 

WASHINGTON-The Obama administration, facing rising anger on the Gulf Coast
over the loss of jobs and income from a drilling moratorium, said Monday
that it would move quickly to release new safety requirements that would
allow the reopening of offshore oil and gas exploration in shallow waters.

Gulf Coast residents, political leaders and industry officials said delays
in releasing the new rules, along with the administration's six-month halt
on deepwater drilling-both issued amid public pressure-threatened thousands
of jobs.

Well-owner BP PLC, meanwhile, faces penalties "in the many billions of
dollars," for the Deepwater Horizon drilling disaster that has been spewing
an estimated minimum 12,000 to 19,000 barrels of oil a day into the Gulf,
said White House Press Secretary Robert Gibbs. The costs of the spill will
"greatly exceed" the amount BP could recoup by selling any of the captured
oil on the market, he said Monday.

Retired U.S. Coast Guard Admiral Thad Allen, who heads the federal response,
said BP's latest emergency containment system is on track to capture as much
as 15,000 barrels of oil per day, which is the maximum amount of oil the
drill ship on the surface can process. BP's latest update on the rate of
recovery late Monday implies that the containment procedure is approaching
that limit. Any leakage beyond 15,000 barrels per day will continue to go
into the sea until a second ship arrives, likely in mid-June.

The oil industry is awaiting new safety regulations from the Interior
Department's Minerals Management Service, which canceled some offshore
drilling permits last week and has had others on hold since early May.
Administration officials say new rules for shallow water oil and gas
drilling could be released as soon as Tuesday.

The White House also said Monday that it supported lifting the cap on
liability damages altogether for any oil companies drilling offshore. The
cap is $75 million unless the government can show criminal negligence.

Some Republicans and industry groups have cautioned that putting the
liability cap too high could make it tough for smaller companies to drill
offshore.

President Barack Obama met with Cabinet officials on the spill Monday and
expressed optimism that it would be contained, but he pointed to the
potential for long-term economic damage. "What is clear is that the economic
impact of this disaster is going to be substantial and it is going to be
ongoing," he said. 

The new drilling regulations are expected to require drillers to have
independent operators certify that the blowout preventers work as designed
to shut off the flow of oil; that independent operators certify the well
design plan is adequate, including proper casing, or cement lining; that the
driller certifies it is in compliance with all regulations and have done all
needed tests.

The moratorium on offshore drilling is shaping up to be one of the most
contentious elements of Mr. Obama's response to the April 20 explosion that
sank the rig and touched off the worst offshore oil spill in U.S. history. 

The White House is working on a legislative package that will include
further unemployment benefits for people who have lost work due to the spill
or the drilling moratorium. 

Photos: Oil Impacts Animal LifeView Slideshow
Angel Gonzalez for The Wall Street Journal Brown pelicans overlooked
containment boom lines at their nesting grounds in the Cat Bay Islands in
Louisiana.
.Tar Reaches the Florida CoastView Slideshow
Reuters ..The Small Business Administration is offering economic injury
loans to Gulf Coast businesses that have been impacted.

Industry trade groups say that each deepwater rig employs 180 to 280
workers, with each of those jobs supporting another four industry workers,
for a total potential loss of more than 40,000 jobs. The moratorium "will
result in crippling job losses and significant economic impacts for the Gulf
region," the National Ocean Industries Association said in a letter Monday.

The House passed an economics package in May that more than quadruples a
levy on oil companies for spill mitigation, to 34 cents a barrel from eight
cents. 

House Democratic leaders will meet on Tuesday with committee chairs to work
out the House's next steps on raising liability limits, reorganizing the
federal regulatory structure on oil drilling and forcing the oil industry to
spend more on safety and environmental technology research.

The debate over how to respond to the Gulf spill disaster has put Mr. Obama
in a difficult spot. He has sought to answer environmental concerns in part
by ordering a six-month moratorium on new wells in water deeper than 500
feet, and calling for tougher safety regulation. 

But during a trip to the Gulf on Friday, Mr. Obama also heard widespread
complaints about the deepwater moratorium. 

At a meeting at the New Orleans airport, Charlotte Randolph, president of
Lafourche Parish, said she implored Mr. Obama for the second time in eight
days to immediately lift the deepwater drilling moratorium. Billy Nungesser,
president of Plaquemines Parish, suggested to the president he should deploy
a federal official on every rig with the authority to shut it down at the
first sign of trouble. Then he could lift the moratorium.

When neither of those ideas gained traction, Steve Theriot, president of
Jefferson Parish, said he asked the president to lift the moratorium on
every oil company but BP. Finally, Sen. David Vitter (R., La.) said the
administration needed to immediately issue the new safety regulations that
were holding up drilling permits. Mr. Vitter said he made the same appeal to
Interior Secretary Ken Salazar three hours after the Obama meeting broke up.

On Monday, the widows of two Deepwater Horizon crewmembers called at a
congressional hearing for stepped up safety enforcement in the offshore
drilling industry, and voiced their support for continuing to drill
offshore. "I fully support offshore drilling and I always will," said
Natalie Roshto, of Liberty, Miss., whose husband, Shane, was among 11 people
killed in the blast. 

Mr. Obama defended the deep-water moratorium on Friday, and administration
officials said Monday that it wasn't being reconsidered. "A repeat of the BP
Deepwater Horizon spill would have grave economic consequences for regional
commerce and do further damage to the environment," the White House said
Monday.