Secretary Salazar and Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) Director Bromwich lifted the deepwater drilling moratorium on October 12, 2010 and declared the Department of the Interior ”open for business.” While the moratorium may officially have been lifted, deepwater drillers could face the same predicament as shallow water drillers – a de facto drilling moratorium.
The official moratorium on shallow water drilling was lifted in May, yet in the six months since the Macondo blowout, BOEMRE has issued only 12 permits for new wells. This, compared to a pre-Macondo average of 10 to 15 new well permits per month, represents a precipitous decline. The agency’s inaction has forced a quarter of shallow water rigs to go idle and jeopardized thousands of jobs, despite the administration’s acknowledgment that shallow water drilling is different than that taking place in deep water. The major distinctions that differentiate shallow-water wells are that they involve mostly natural gas, are drilled in mature, predictable, and known reservoirs, and their blowout equipment sits on the deck of the rig.
Despite the announcement, Bromwich acknowledged that BOEMRE is understaffed and lacks adequate resources to conduct the deepwater drilling permit review and approval process. The Department has requested that Congress provide the agency with an additional $100 million for fiscal year 2011 to cover the costs of increased permitting and enforcement activities and more inspection officials. Although a budget increase for the agency is likely, there certainly are no guarantees as to how much Congress will ultimately add to BOEMRE’s coffers. During a moment of optimism at yesterday’s announcement, Director Bromwich attempted to show that BOEMRE will be able to adequately review deepwater permit applications. He pointed to the issuance of five shallow-water permits during the last week, a definite upsurge from previous months. Whether this rate of approval will continue for shallow water drillers is an open question.
As for the timing for approvals of deepwater permits, when questioned by reporters, Bromwich emphasized that permits would not be approved “today, tomorrow or next week” under the new regime, and that the timeline was ultimately dependent on the operators’ own ability to demonstrate compliance. Although Bromwich refused to offer specific estimates of when deepwater permits would begin to be issued, his “sense” was that BOEMRE would have some permits approved by the end of the year. If the experience of shallow water drillers is any indication, the number of deepwater drilling permits issued in the fourth quarter will be minimal.
A copy of Salazar’s Decision Memorandum terminating the suspension of offshore drilling can be found here: http://www.doi.gov/news/pressreleases/loader.cfm?csModule=security/getfile&PageID=64767.
DOI’s press release announcing the termination of the moratorium can be found here: