[StBernard] Oil Drilling to Resume in the Gulf's Deep Waters

[Westley Annis]

Oil Drilling to Resume in the Gulf's Deep Waters
By JOHN M. BRODER and CLIFFORD KRAUSS
WASHINGTON - The Interior Department said Monday 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 20. The disaster killed 11 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 to 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 10 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 on Friday 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."